Liberty Specialty Markets (LSM), part of global insurance giant Liberty Mutual Insurance, is moving its insurance company from the UK to Luxembourg ahead of Brexit in 2019, but it does intend to maintain its “substantial London presence”.
The decision was taken in preference to setting up a separate insurance company, according to LSM.
The UK’s departure from the EU represents a significant challenge for London-based providers of financial services, as they are likely to lose their highly prized passporting rights, which grant them access to all EU markets.
LSM president and managing director Matthew Moore said that this structure will set the insurer up “perfectly to take advantage of the opportunities” available in Europe in the post-Brexit environment.
“Moving our insurance company to Luxembourg will minimise any disruption to our clients and staff by providing continuity of our insurance company paper,” Moore said.
LSM has also reorganised the management of its European operation, appointing Eric Daout as the general manager of its Luxembourg companies. Daout was previously managing director of CIGNA Insurance Europe.
Alongside Daout, LSM’s European businesses will be led by Dieter Winkel, president of LSM Reinsurance based in Cologne, and Kadidja Sinz, European head of insurance based in Paris
Moore said: “We have ambitious growth plans for our teams based in Europe, and I am delighted that we have been able to secure a first class leadership team in Eric Daout, Dieter Winkel and Kadidja Sinz, ably supported by high calibre service-driven underwriting teams. We also remain committed to London and will retain a substantial presence there.”
He added: “The post-Brexit structure we have chosen will mean that for our clients it will be business-as-usual. LSM will continue to be able to offer company and Lloyd’s paper throughout the UK and Europe, and one company paper for pan-EU/UK risks.”
“Our brokers will continue to receive the same high levels of service as they currently do from our teams in Europe, without any disruption caused by changing our insurance company paper. Europe is a key market for us and we are working towards expanding our capabilities and product offering in Europe over the coming months and years.”
EU and UK negotiators thrashed out a deal on the first-phase Brexit issues of the divorce bill—estimated at between £35 billion and £39 billion—the rights of EU and UK citizens abroad, and the Irish border, ahead of the weekend, meaning talks can move on to transition arrangements and the future trading relationship.
Huw Evans, director general of the Association of British Insurers, welcomed this progress, saying: “It is good to see progress in the Brexit talks. We hope that this can pave the way for substantive commitments in 2018 on both transition arrangements and the future trading relationship with the EU.”
But the EU’s chief negotiator, Michel Barnier, has warned that the UK is likely to be offered a free-trade deal similar to the one that the EU agreed with Canada last year, which would provide significantly less economic integration.