Agreement has been reached in principle by the boards and senior management of both clubs, but the deal is still subject to due diligence and regulatory approval before it is put to the members of both clubs.

Amalgamation would create a marine insurance mutual that would have a premium income approaching two thirds that of Gard, the Norwegian P&I club that is now at the centre of a diversified hull and offshore energy insurance group.

The Newcastle based North of England Club is ‘A’ rated by Standard & Poor’s but Sunderland Marine a near neighbour in Durham city is BBB+ rated but it looks as if a larger combined business would keep the higher rating.

The North of England Club, providing P&I cover for a 170m gross ton fleet, has members who include Teekay, MSC, Sovcomflot, Zodiac Maritime, Norden, Alpha Tankers & Freighters, Shipping Corp of India, Seaspan, Clipper, UASC, Hamburg Sud, Louis Dreyfus, Dynacom, Golden Union, Wagenborg and Arklow Shiping.

Sunderland Marine is a top insurer of fishing vessels writing 13,500 policies in 50 countries worldwide. It is also the largest insurer of the aquaculture industry.

“Combining the business interests into one group would create one of the largest global marine insurance operations.  The combined group would provide enhanced financial stability for Members, as well as an augmented diversity of product lines, whilst maintaining service excellence and enhancing the competitive position,” the North of England Club says in a market circular.

“As a result of the business similarities between the North and Sunderland Marine and their complementary global operations, we have now agreed in principle to investigate the practicalities of a merger. It will result in one of the largest global marine insurance providers, which North’s directors believe will provide considerable financial stability for the club’s members and significantly enhance our competitive position,” added  North of England Club chairman Pratap Shirke of ASP Ship Management.

Sunderland Marine chairman, Trevor Hart says the deal will bring together two of the longest established and most successful international marine insurance businesses based in north-east England who have long enjoyed an open relationship. “Combining the business interests into one group would create a significant global marine insurance operation, enabling us to continue growing our business with a competitive edge, whilst maintaining service excellence,” says Hart.

Click on the articles in the 'related' column to the right to read more about the merger plan.