Dublin looks set to lose out in the race to become the location for Lloyd’s of London’s new European hub, with the insurance group expected to plump for either Luxembourg or Brussels when it announces its decision this week.

According to Reuters, the world’s largest speciality insurance market has ruled out Dublin for its new European subsidiary, another disappointing outcome to Ireland’s efforts to capture and attract new business in the wake of the UK’s departure from the EU.

Late last year the 328-year-old insurance market, which is home to around 100 insurance syndicates, said it was looking for a new European hub, and had drawn up a shortlist of six centres, including the two aforementioned, plus Malta, Frankfurt, Paris and Dublin.

With its easy access to London and the similarity of its language and legal system, Dublin was initially seen as a frontrunner. It is also an established European hub for insurers like Zurich and Metlife. However, it’s understood that Brussels and Luxembourg showed more flexibility on capital, allowing Lloyd’s to use reinsurance to transfer a larger amount of capital needed for an EU subsidiary back to its London headquarters.

As a result, the insurer says it will announce its decision on Wednesday, the same day that Theresa May is to trigger article 50, and it’s now unlikely to be Dublin.

Rival EU countries

This month Minister of State for Financial Services Eoghan Murphy expressed concern that Ireland was being undercut by rival EU countries as they sought to woo UK-based financial firms in the wake of Brexit. “Other cities in Europe are being very aggressive in trying to win business,” he said.

The Lloyd’s move follows US insurer AIG’s decision this month to opt for Luxembourg over Dublin as the location for its European regional headquarters. While Dublin was firmly in the running for the business, finishing as a runner-up to Luxembourg from a shortlist of locations across Europe, in the end it lost out to the Grand Duchy. The American insurer will now set up a hub in Luxembourg to write EEA and Swiss business, with branches across the region.

US private equity giant Blackstone is also understood to have chosen Luxembourg as its new EU base in recent weeks.

Insurance Ireland says lessons must be drawn from the decisions, and is calling for a review process to inform Government and industry efforts to secure future opportunities.

“Insurance Ireland has also sought a meeting with the Government to discuss this review process and further collaboration to convert expressions of interest into investment decisions,” said Kevin Thompson, chief executive of Insurance Ireland.

Post-Brexit hub

However, while AIG and Lloyd’s may be looking elsewhere a host of others have already opted for Ireland, including Barclays, which has chosen Ireland as its post-Brexit EU hub, and Beasley Re, which will use Ireland as a base to increase European business post-Brexit. Ulster Bank owner Royal Bank of Scotland also said last week that it could look to Dublin as a post-Brexit hub.

A clue to AIG’s decision, and potentially also that of Lloyd’s, if the assertion is true, may be found in the latest survey of global financial centres.

Published on Monday, the Global Financial Centres Index 21 from commercial thinktank Z/yen finds that Dublin has fallen two places in the perception of global financial professionals, dropping down to 33rd place.

And what of Luxembourg? Well, the centre has also fallen, down six places. However, it remains higher up the ranking, slipping from 12th to 18th, while it is the third most popular centre in western Europe, behind only London and Zurich.

Frankfurt has also dropped down the rankings, slipping to 23rd from 19th previously, but it also ranks higher than Dublin. Paris holds steady at 29th.

Competing centres

On the positive side, Dublin is higher than other competing centres such as Amsterdam (down seven to 40); Brussels (up seven to 55th); and Malta (down three to 77th). Moreover, Dublin has joined Luxembourg , Gibraltar and Dubai as one of the “15 centres likely to become more significant”.

And the survey also offers some clues on Luxembourg’s relative weaknesses, and therefore areas which Dublin could hope to capitalise on. In banking, the centre lost five places, dropping back to 14th out of 15, while in professional services it lost seven places, although it advanced three in government and regulatory.