Lloyd’s to establish a presence in the EU
INSURANCE market Lloyd’s of London is to establish a subsidiary in Brussels to maintain a presence in the EU once Britain leaves.
The company said the Belgian capital emerged at the top of its list after scoring highly with executives for its regulatory framework and access to talent.
The move means Lloyd’s will be able to write risks from all 27 European Union and three European Economic Area states after Brexit.
Chief executive Inga Beale told the BBC’s Today programme: “What we were after was some jurisdiction that had a really robust reputation for regulation. We also wanted to be able to access talent and we wanted really good accessibility. “Brussels came out top of our list.” However, she said tax was not a factor in the company’s decision when choosing a new EU base.
Lloyd’s, which employs 700 people in London, aims to start work at the Brussels office from January 1, 2019.
It is believed the move will result in around 100 jobs being shifted from London, though that number could rise as the insurance market establishes itself in Belgium.
It came as the company unveiled its full-year results, with profits flat for 2016 after the firm wrestled with “extremely challenging” conditions driven by pricing pressures.
Annual pre-tax profits came in at £2.1bn, the same as the year before, but gross written premiums lifted 11% to £29.9bn over the period.
It said the level of major claims had reached £2.1bn – the fifth-highest since the turn of the century and above the long-term average – following Hurricane Matthew and the Fort McMurray Wildfire in Canada.
In line with the rest of the insurance industry, the firm was also impacted by Government changes to the way personal injury claims are calculated with its cut to the Ogden discount rate.
However, it said it was making progress on global markets, emerging as the leading player for excess and surplus lines in the United States, shifting half its managing agents to Shanghai and Beijing, and winning approval for a reinsurance office in Mumbai, India.
Ms Beale said the firm’s results underscored a need to focus on delivering “real value for money” and reducing costs.
She said: “This has been a year of challenge for the insurance sector, with premiums once more under continued downward pressure.
“It is vital that the corporation does everything it can to support the market and make the platform attractive, whilst demonstrating value for money.”
Ms Beale added: “Our collective focus must be on providing customers with the products they want, embracing innovation and modernisation.”
The decision by Lloyd’s to choose the Belgian capital as its preferred site for an EU base was made during a meeting of the firm’s franchise board on Tuesday.
It is understood that Luxembourg was also a strong contender on its shortlist, but was eventually ruled out, along with Malta and Dublin.
Banks have issued the lion’s share of warnings over Brexit’s impact on jobs, claiming a loss of passporting rights would force them to set up new operations on the continent and migrate staff out of the capital.
US banking giant JP Morgan said 4,000 jobs would leave the UK, Goldman Sachs threatened to move 2,000 roles and HSBC said it would transfer 1,000 positions from London to Paris following the Brexit vote.
The Brussels move comes as Lloyd’s gears up for a top-level change, with Bruce Carnegie-Brown taking over John Nelson’s role as chairman from June.