Lloyd’s heads to EU over Brexit
LLOYD’S of London will open a Brussels subsidiary in early 2019, the historic insurance market said yesterday, the first company to respond to Britain’s decision to trigger Brexit.
The group, which insures against catastrophes such as earthquakes, shipwrecks and revolutions, is now in the eye of the Brexit storm and seeking to ensure access across the European Union 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.
Lloyd’s, which employs 700 people in the British capital, will start work at the Brussels office from January 1, 2019.
Reports suggest that about 100 jobs could be shifted, adding that Brussels beat Dublin, Luxembourg and Malta in the selection process.
The business 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 added yesterday that its new Brussels subsidiary would allow it to underwrite insurance risks across the 27 EU nations that will 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 chief executive Inga Beale said Brussels met its “critical” requirements of a “robust regulatory framework in a central European location” as well as access to talent.
She added: “I am excited about the opportunities this venture will offer the market by providing that important European access efficiently.”
Nine months after the shock referendum vote, Prime Minister May on Wednesday formally activated Article 50 of the Lisbon Treaty, meaning Britain is set to leave the bloc in 2019.
Lloyd’s stressed yesterday that, for at least two more years, there will be no immediate impact on its existing insurance policies, renewals or new policies.
“It is now crucial that the UK govern- ment 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,” added Beale.
“I believe it is important not just for the City [London’s financial district] but also for Europe that we reach a mutually beneficial agreement.”
Britons voted on June 23 in favour of quitting the bloc despite warnings from the business community over the potential adverse impact of Brexit.
Lloyd’s currently enjoys “passporting” rights – which allows EU member states to trade across national borders, providing a gateway to access the rest of the bloc. It also benefits from trade agreements.
Separately yesterday, Lloyd’s revealed that profits flatlined in 2016 against a backdrop of “extremely challenging” conditions.
Annual pre-tax profits were unchanged at £2.1 billion ($2.6 billion, 2.4 billion) compared with 2015.
The level of major claims also hit £2.1 billion – the fifth highest since the turn of the century.
Claims soared last year on the back of wildfires in Canada in May and June, and Hurricane Matthew – which was the first category 5 storm to form over the North Atlantic in nearly a decade.
The performance was partly buoyed, however, by rising investment returns – and foreign exchange gains driven by the pound’s Brexit-fuelled collapse.