Preparing for the "hard Brexit" scenario, insurers seek a new home for their European operations
A "transition or implementation period" was the most important requirement, Sam Woods, a deputy governor at the Bank of England, said in a recent speech, warning that if until Christmas negotiations have not reached any agreement on this topic, the financial conglomerates crowding the London City will have to start discounting the likelihood of a transition and plan for the worst case scenario, the "hard Brexit".
In fact, as Woods said, "the EU's position on transition is not yet clear - despite some obvious risks to EU financial stability in its absence". On the hand, it seems that across the English Channel, expectations are rather directed towards the hard Brexit scenario. In fact, the Federation of German Industries has warned German firms operating in the UK that they must brace themselves for a "very hard Brexit", blaming the lack of a clear concept of the Brexit negotiation on the British government side.
Not willing to put at risks their capability to serve the European clientele, many insurance players have already started to plan ahead and choose an European base of operations for the after-Brexit future. Establishing completely new subsidiaries to run their European business or just strengthening already existing European units, insurers are rolling up their sleeves in preparation for the bureaucratic and logistic hardships of the move.
Where are re/insurers seeking for an European home? Here are some examples:
- Luxembourg: Hiscox, RSA, Tokio Marine; American Insurance Group (AIG); CNA Hardy; FM Global
- Brussels: Lloyd's of London; MS Amlin; QBE Insurance Group
- Munich: Markel
- Dublin: Neon Underwriting; Royal London Mutual Insurance Society; Standard Life; XL Group; Admiral Group; Aviva; Chaucer; Everest Re Group
- Paris: Chubb; Global Aerospace