Seaspan Becomes First Foreign Owner to Pay P&I Calls in Renminbi

Seaspan is taking the internationalisation of the renminbi into marine insurance, becoming the first overseas shipowner to pay protection and indemnity calls to China P&I Club in the Chinese currency.

The containership lessor and the China Shipowners Mutual Assurance Association signed an agreement in Shanghai covering two 14,000 teu newbuildings. The vessels will enter the club with their calls settled through a cross-border renminbi arrangement.

China P&I Club described the deal as a first for the organisation and a pioneering use of offshore renminbi in international protection and indemnity insurance. The arrangement initially covers calls only: it does not mean that claims, guarantees or reinsurance payments will also be settled in the currency.

The distinction matters. Calls are a predictable annual outflow that can be budgeted and hedged; claims and guarantees are lumpy, arise wherever the incident occurs and generally have to be paid in the currency the counterparty demands. Moving the first of those into renminbi is a controlled step rather than a redenomination of a P&I club relationship.

Even so, the agreement takes the currency into an area of shipping finance that has been dominated by the US dollar and by the London and Nordic insurance markets. Seaspan has been among the more active users of Chinese capital markets and Chinese yards, and has previously arranged newbuilding payments in renminbi as well.

For Chinese insurers the attraction is straightforward: an international owner in the membership widens the club's exposure beyond domestic tonnage and builds a record of cross-border settlement that other owners can point to. Whether that record translates into wider adoption will depend on how the currency arrangement performs when a substantial claim has to be handled.