Insurance market working on ‘contingency plan’ so it can continue trading across Europe once article 50 is triggered

This article is more than 4 years old

This article is more than 4 years old

Lloyd’s of London plans to be ready to open an office in another EU country the day Theresa May’s government triggers article 50 to begin formal negotiations to leave the union.

The world’s oldest insurance market is drawing up contingency plans to protect its business from the impact of Brexit, which will be implemented as soon as the UK begins divorce proceedings from the EU, expected early next year.

Inga Beale, Lloyd’s chief executive, said several cities were being considered for the new subsidiary, including Dublin, Paris and Frankfurt. This would involve moving some staff from London. Lloyd’s is considering setting up an EU-wide subsidiary or branches in several member states.

“We are now focusing our attention on having in place the plans that will ensure Lloyd’s continues trading across Europe,” Beale said. “We are making very robust plans. We could open a subsidiary in one of the remaining EU countries that will enable us to passport.”



The issue of passporting – which allows UK authorised banks, insurers and fund managers to conduct business in the other 27 EU states – is crucial. Data from the Financial Conduct Authority published this week showed almost 5,500 UK firms rely on corporate “passports” to conduct business across the EU.

John Nelson, the Lloyd’s chairman, 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.”

Lloyd’s would lose about £800m of premiums if it lost passporting rights, 4% of the total. More could be at risk as a result of the Brexit vote, Beale said – nearly £3bn, or 11% of Lloyd’s premiums, comes from continental Europe.

She described the fallout from the Brexit vote as a “major issue for us to deal with”, one of the biggest challenges faced by Lloyd’s in its history. But the group will keep its London base. “This has been our home for 328 years and it will remain our headquarters.”

Lloyd’s is lobbying the government to maintain passporting rights for the organisation and its 97 syndicates.

It is a market where insurers do business via brokers. Many insurers are also drawing up contingency plans and are considering setting up subsidiaries in another EU country to retain access to the single market.

Facebook Twitter Pinterest Inga Beale, Lloyd’s chief executive.

Lloyd’s, which began as a coffee house in the City where merchants and shipowners met, provides specialist insurance such as marine, energy and political risks, and recently provided cover for a Cadbury’s scientist’s taste buds.

The group reported a profit of £1.46bn for the first half of this year, up 22% from £1.2bn a year ago. The results were boosted by the strengthening of the dollar against sterling post the EU referendum and better investment returns, “neither of which represent sustainable profitability”, it said.

Lloyd’s highlighted big claims from the Fort McMurray wildfires in Alberta, Canada, and said premiums continued to be under pressure.

Beale, Nelson, and Lloyd’s former chief risk officer Sean McGovern had strongly campaigned for a remain vote.

The Lloyd’s figures showed gross premiums rose to £16.3bn from £15.5bn in the first half, and the return on capital improved to 11.7% from 10.7%. The firm has continued its global push, opening a new office in Bogotá, Colombia, and applying for onshore reinsurance licences in India and Malaysia.

Beale said Lloyd’s would continue to push into Latin America, with Colombia and Mexico seen as key markets. Singapore is its second-biggest hub, where 400 people work.

Nelson said: “This complements the growth we are seeing in Dubai, China and in our more traditional markets, particularly the United States.”