Lloyd’s of London, the specialist insurance and reinsurance market, confirmed that it will be setting up a new European insurance company in the Belgian capital of Brussels.
Lloyd’s chief executive officer (CEO), Inga Beale, said that the intention is for the company to be ready to write business for the 1st January 2019 renewal season, subject to regulatory approval.
The company will be able to write risks from all 27 European Union (EU) and three European Economic Area (EEA) states after the United Kingdom has left the EU, to provide customers and partners with “continued access to the innovative solutions of the Lloyd’s market.”
“It is important that we are able to provide the market and customers with an effective solution that means business can carry on without interruption when the UK leaves the EU,” said Beale.
“Brussels met the critical elements of providing a robust regulatory framework in a central European location, and will enable Lloyd’s to continue to provide specialist underwriting expertise to our customers.”
“I am excited about the opportunities this venture will offer the market by providing that important European access efficiently.”
Lloyd’s noted that although the UK government has triggered Article 50, it remains a full member of the EU for at least two more years and therefore, there is no immediate impact on existing policies, renewals or new policies, including multi-year policies, written during this period of time.
“It is now crucial that the UK government and the EU proceed to negotiate an agreement that allows business to continue to flow under the best possible conditions once the UK formally leaves the EU,” added Beale.
“I believe it is important not just for the City but also for Europe that we reach a mutually beneficial agreement. We stand ready to help and support the government as best we can.”
Andrew Holderness, global head of the corporate insurance group at law firm Clyde & Co commented: “The selection of Brussels as the location for its European subsidiary sends out a strong signal of intent that Lloyd’s is not only committed to protecting its existing EU business, but that it has ambitions to use this move as a springboard for further advances in the EU continental market.
“Situated at the very heart of the EU, Brussels is a prestige location and while some of the other candidate cities looked good on paper in terms of more favourable regulation and tax treatments, Lloyd’s final decision will in part have been influenced by the capital efficiency of the proposed structure with the business being reinsured back into the London market.”
Lloyd’s is believed to have considered a number of locations for its new EU hub, including Dublin, Frankfurt and Malta, but reports suggested that it had recently narrowed the options to either Brussels or Luxembourg. Insurer AIG recently announced that it would be transferring London-based business to the latter location.
Sarah Ouarbya, a partner in the financial services team at accounting and consulting group Mazars said: “By choosing Brussels as the hub for Lloyd’s activities in the EU, Lloyd’s has loudly reaffirmed its commitment to serve its EU client base. While a little unexpected, the choice is consistent with Lloyd’s vision of being a truly international market with integrity at the heart of its business.
“Brussels is not the ‘easy option’ and demonstrates Lloyd’s commitment to maintaining its position as a world class market for underwriting post-Brexit.”
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