Lloyd’s readying EU move plans

Company started business in 1688, and houses more than 90 insurance syndicates

The Lloyd’s of London insurance market is already working on plans to move some business to the European Union, aiming to be ready for the shift as soon as Britain starts divorce proceedings from the bloc, its chairman said yesterday.

Britain is not expected to leave the EU for several years but the remarks from chairman John Nelson show how some financial players are acting rapidly due to the time it will take to set up operations in countries that remain in the bloc.

The world’s leading speciality insurance market said earlier this month it would have to operate some business from the EU after Brexit if Britain loses so-called passporting rights for financial companies based in the country to sell products across the bloc.

Lloyd’s, which started life in Edward Lloyd’s coffee house in 1688, and houses more than 90 insurance syndicates in a striking building in the City of London, is already preparing for that possibility, Nelson said.

“Our aim is to have a contingency plan so we can write business onshore in the EU ready by the time Article 50 is triggered,” he said by telephone.

Notification

Prime Minister Theresa May has ruled out giving formal notification this year of Britain’s intention to leave the EU under Article 50 of the EU treaty, but has not given any clear guidance of her intentions beyond that.

Irish prime minister Enda Kenny said this week that members of the British government have indicated they may be ready to launch the formal negotiations as soon as January or February 2017.

European Council President Donald Tusk has made similar comments, citing recent talks with May.

Once the exit process has been started, Britain has an initial two-year period to negotiate its departure.

But Nelson’s remarks show that some financial players may not be prepared to wait for the outcome of those talks.

The syndicates which operate under the auspices of Lloyd’s offer specialist insurance and reinsurance in areas such as marine, energy and political risk.

They benefit from Lloyd’s strong credit rating and its licences that enable the syndicates to sell their products across the globe.

The traditional market is still based on face-to-face contact during specified trading hours, unlike London’s stock market, which is fully electronic.

Around 11 per cent of the £25 billion (Dh120 billion, $33 billion) in gross premiums written last year by the Lloyd’s syndicates came from the EU, although it is insurance, rather than reinsurance, business that would be affected by the loss of passporting.