Lloyd’s of London is to open a new Brussels subsidiary in early 2019, the historic insurance market said yesterday in the first fallout from Britain’s decision to trigger Brexit.
The group, which has insured against earthquakes, shipwrecks and revolutions, is now in the eye of the Brexit storm and seeking to ensure access across the EU once Britain leaves the bloc.
Lloyd’s announced the news one day after British Prime Minister Theresa May activated the two-year countdown to the nation’s EU divorce.
“Lloyd’s, the specialist insurance and reinsurance market, has announced it will be setting up a new European insurance company to be located in Brussels,” it said in a statement that gave no indication of potential job losses in London. “The intention is for the company to be ready to write business for the 1st January 2019 renewal season, subject to regulatory approval.”
Lloyd’s had repeatedly warned before last year’s shock referendum that it could move operations to elsewhere within the EU in the event of Brexit.
The group yesterday added that its new Brussels subsidiary would allow it to underwrite insurance risks across the 27 EU nations that are to remain.
“The company will be able to write risks from all 27 European Union and three European Economic Area states after the United Kingdom has left the EU, providing our customers and partners continued access to the innovative solutions of the Lloyd’s market,” it said.
Lloyd’s CEO Inga Beale said Brussels met its “critical” requirements of a “robust regulatory framework in a central European location.”
“I am excited about the opportunities this venture will offer the market by providing that important European access efficiently,” she added.
Media reports suggested that about 100 jobs could be shifted from London, although that number might rise as the firm establishes itself in the Belgian capital.
However, the headcount for the new operation will be in the “tens, not the hundreds,” with some people moving from London and some recruited locally, Lloyd’s chairman John Nelson said yesterday in a Bloomberg TV interview.
According to media, Brussels beat Dublin, Luxembourg and Malta in the selection process.
Belgium’s regulatory regime and an existing insurance talent pool in Brussels influenced the company’s decision to place the hub in Brussels, which is “at the heart of the EU,” Nelson said in the Bloomberg interview.
Nine months after the shock referendum vote, May on Wednesday formally activated Article 50 of the Treaty of Lisbon, meaning that Britain is set to leave the bloc in 2019.
Lloyd’s yesterday said that, for at least two more years, there would be no immediate impact on its existing insurance policies, renewals or new policies.
“It is now crucial that the UK government and the European Union proceed to negotiate an agreement that allows business to continue to flow under the best possible conditions once the UK formally leaves the EU,” Beale said in the statement.
“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,” she said.
Belgian Finance Minister Johan Van Overtveldt said Lloyd’s move could inspire other firms.
“Brussels’ position as a financial center is improving, which could inspire other insurers and specialized financial institutions for which Brussels already has a strong tradition,” the Belga newswire quoted him as saying.
As a market for risk coverage, Lloyd’s of London does not underwrite insurance itself, but rather through about 100 registered syndicates. About 11 percent of its volume come from EU countries outside of the UK.
Additional reporting by Bloomberg
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