The Lloyd’s of London insurance market, a bastion of the City establishment for more than 300 years, could move some of its business out of the UK as a result of the decision to quit the European Union.
The 328-year-old insurance market said it had begun finalising plans to set up a new EU-based subsidiary and was looking at five European cities as homes, with Dublin, Frankfurt and Paris understood to be on its shortlist.
Lloyd’s announced after the referendum vote that it had begun a process to look at the options for its European business. It decided at the beginning of the month to end work on the potential opening of several EU branches and instead focus its attention on a subsidiary.
Any subsidiary would not supplant Lloyd’s London headquarters and the new business is intended to ensure that the insurance market can continue servicing its EU-based clients in a move first reported by the Financial Times.
Just over a tenth of Lloyd’s revenues come from Europe and without an EU passport the company could be locked out of the single market. The insurer said it would provide a more detailed explanation in February. The move is expected to cost Lloyd’s tens of millions of pounds.
Advertisement
The Irish central bank said yesterday that several insurers were considering setting up European headquarters in Dublin as a means of ensuring that they maintained the ability to trade across the EU from a single location inside the bloc.
If the UK were to agree an exit deal that would guarantee financial services businesses’ continued access to the single market, Lloyd’s could abandon the plans but the insurer has decided it cannot take the risk of being excluded.
A spokesman for Lloyd’s said: “Following the referendum we committed to looking at the options that would allow the Lloyd’s market to continue trading seamlessly with the EU. This included establishing a subsidiary model.”
Lloyd’s is one of the first City institutions formally to announce its plans in response to the EU vote.
Eamonn Flanagan, insurance analyst at Shore Capital, said: “You’ve got to remember that these are people who manage risk and dealing with risk is in their DNA so it was incumbent on them to do something . . . I think the syndicates with large European businesses will be very pleased with what they are hearing. On the other hand, members without any exposure might have an issue given the likely impact on costs.”
