Shoreline launches COFR fight-back

The restructuring involves new reinsurance arrangements that effectively eliminate the risk of the club's shipowner members facing a surprise cash call.

Shoreline Mutual has reached an understanding with its reinsurers that they will offer rates allowing it to give cheaper financial guarantees for obtaining Certificates of Financial Responsibility (COFRs) for US trading than either of its new rivals.

Market sources believe Shoreline has agreed to terms conditional on the rates to be offered by two new P&I club-backed schemes, Shipowners Insurance and Guaranty (SIGCo) and Arvak.

Richard Black, a director at Stockton Re, one of the supporters of SIGCo, says if the linkage is true, it is a "desperate tactic."

Shipowners, however, are already the winners of the new battle of the COFR schemes. The cost of obtaining financial guarantees for US trading through 1997 will be at least 20 per cent lower on this year.

The revised Shoreline reinsurance program is likely to see Zurich Group subsidiary Centre Re adopting a reduced role and leading Lloyd's underwriter Stephen Catlin taking a higher profile.

The only risk that could lead to a Shoreline supplementary call would arise from the international reinsurance exclusion of nuclear contamination risks somehow coming into play.

SIGCo has so far Issued several hundred quotations for financial guarantees while Arvak, which would have members of Assuranceforeningen Skuld as investors, is moving nearer to launch.

Shoreline Mutual, a Bermuda-based, special-purpose COFR club set up two years ago, currently provides COFR guarantees for about 1,900 vessels totalling 57.5 million gt. Members Include Evergreen, Sanko, Hanjin, Stena, P&O Cruises, Gotaas-Larsen and First Olsen Tankers.