LLOYD’S OF LONDON, WHICH DESCRIBES ITSELF AS THE WORLD’S SPECIALIST INSURANCE MARKET, HAS ANNOUNCED IN A STATEMENT RELEASED THE DAY AFTER THE FORMAL OPENING OF BREXIT, THE CHOICE OF BRUSSELS AS THE HEADQUARTERS FOR ITS EUROPEAN UNION SUBSIDIARY, SO AS TO CONTINUE ITS INSURANCE BUSINESS IN THE SINGLE MARKET. OTHER CITIES CONSIDERED WERE LUXEMBOURG, DUBLIN, FRANKFURT, PARIS AND VALLETTA. THE EUROPEAN BRANCH WILL BE OPENED IN THE BELGIAN CAPITAL WITH THE OBJECTIVE OF MAKING IT READY TO WRITE BUSINESS BY 1ST JANUARY 2019.
Lloyd’s is not an insurance company but an insurance marketplace, governed by the Lloyd’s Act of 1871 and subsequent Acts of Parliament, within which its members (which may be individual or corporate), provide capital and come together to pool risk underwritten by groups of underwriters known as syndicates, while brokers intermediate with policyholders.
Lloyd‘s has been the most vocal among the main financial services organisations in stating the need to establish a European subsidiary if the United Kingdom loses its access to the Single Market after Brexit.
Lloyd’s choice is highly likely to influence insurance companies in deciding to open European branches, since it is a magnet for insurance underwriters, most of which are currently based in London. Several insurance companies are already monitoring Lloyd’s strategy: for example, the US American International Group Inc. (AIG) announced on 8th March 2017 the opening of a European hub in Luxembourg, while Hiscox Plc., one of the underwriters of Lloyd’s, will choose between Luxembourg and Malta. Also Beazley Plc., which manages six Lloyd’s syndicates, said it will turn its Dublin-based reinsurance operation into an insurance subsidiary.
Lloyd’s justifies its choice to open a European hub with the need to preserve access to the Single Market, so that it can keep providing its customers with effective solutions and that business can carry on without interruption when the United Kingdom leaves the European Union.
Lloyd’s adds that the outcome of the Brexit referendum did not have any negative impact on its economic ranking. Standard & Poor’s, one of the three major credit-rating agencies, recently confirmed its A+ rating.
Davide Scavuzzo
