While UK politicians are fighting for a future without EU patronage, Lloyd’s of London, the insurance giant has decided to move its major European hub from London to Brussels. The 320-year-old company announced its decision early this morning, stating that the EU capital has been chosen in competition with another six European cities. Lloyd’s chairman, John Nelson, underlined that the firm went through “thorough evaluation” processes and Brussels won on the important factors, such as clear regulation and a potential working force.
The office is due to open in the beginning of January 2019 and initially will employ 60 people, mainly from offices on the continent. However, according to Inga Beale, the chief executive in the company, stated that some staff in the London office with jobs involving European deals, will also be moved to the new office.
Lloyd’s has been one of the biggest lobbyists in the UK for keeping the passport rights of citizens which will allow British banks and insurance companies to continue their business with the countries on the other side of La Manche. However, according to Nelson, now “the chances are lower than they were” and therefore the company has decided to open a special branch in Brussels. According to the EU 27 regulations, setting up the new company and renewing of many commercial insurances will take time, and the insurance giant wants to be sure that they are “up and running” by the middle of next year.
Still, Baele said that if passporting rights were guaranteed: “we would not require an EU subsidiary” and would help EU firms maintaining their business in Britain.”
The announcement for the new Brussels division came with a statement about Lloyd’s full-year results. Nelson said the group is marking £2.1 billion flat profits, but the so-called underwriting profits, crucial for the market, dropped to £500 million, 3 times less than last year. “Underwriters are under a lot of pressure. If interest rates tick up a bit, which they might, things will tighten up a bit but I don’t see any significant change in the short term so we need to keep up the underwriting discipline.” Commented Nelson.
Currently 11% of the premium rates of Lloyd’s are with EU clients and half of them – about £1.5 billion are under risk from the hardest Brexit outcome. However, Lloyd’s are confident that major reinsurance contracts and specialist insurance such as aviation and naval will not be affected.
Other financial giants like JP Morgan, said that they have also considered shifting operations towards European cities including Dublin, Luxemburg or Malta.