Despite the UK’s fast-approaching exit from the European Union, Lloyd’s chairman Bruce Carnegie-Brown says the market is targeting future growth in the European Economic Area higher than the industry average.
Speaking to Re-Insurance today on the side-lines of the official launch of its Brussels subsidiary, Lloyd’s Brussels SE, Carnegie-Brown noted that “Lloyd’s is massively under-punching its weight in Europe” and said the market was targeting growth of 3 percent premium growth annually, against an industry average of circa 2.6 percent.
Approximately 15 percent of Lloyd’s business comes from Europe, excluding the UK, which is the equivalent of circa £4.5bn.
40 percent of which is generated by coverholders and 60 percent open market business.
When asked whether Lloyd’s might lose business from Lloyd’s insurers who, since the 2016 referendum, have established operations in the EU, Carnegie-brown expects to retain the vast majority of the coverholder business.
“All we’re doing is rebooking it…so there’s no reason to expect it would not be as sticky”, he explained.
However, the chairman said the future location of open market business is obviously less certain.
Many of the largest Lloyd’s insurers – including MS Amlin, Hiscox, QBE, Beazley and Liberty – have established underwriting operations in EU countries which gives them the ability to write risks directly rather than through the Lloyd’s Brussels framework.
But he added that Lloyd’s has become increasingly confident on writing more open market business as its Brussels subsidiary took shape this year.
“We’ve been getting more encouraged as we’ve been setting Brussels up”, he explained.
“We actually see lots of opportunity there and it’s a fast-growing portfolio for us.”
The chairman’s comments come as the Corporation starts a “new chapter” for Lloyd’s in Europe through the official opening of its Belgian insurance arm.
Lloyd’s Brussels SE, which the Corporation opted to set up in the wake of the UK’s vote to leave the European Union, means that Lloyd’s can write non-life risks in the European Economic Area (EEA), regardless of what the eventual settlement will be for the UK’s exit from the EU next year.
“Lloyd’s is ready for Brexit with Lloyd’s Brussels now officially open for business Our decision to set up an insurance company in Brussels has provided certainty to our partners and customers throughout Europe, reassuring them that they can continue to benefit from Lloyd’s specialist expertise and financial security post-Brexit,” Carnegie-Brown said in a statement.
“We are already working with our partners on 2019 policies, and Lloyd’s Brussels is now placing and processing European risks.”
Carnegie-Brown added: “Now that Lloyd’s Brussels is operational, we are looking forward to the new opportunities that we will have to grow our business with European customers through a locally staffed, locally regulated and locally capitalised insurer.”
Lloyd’s Brussels is a separately capitalised and regulated insurance company which will begin underwriting EU risks from 1 January 2019.
To assist with the capitalisation of Lloyd’s Brussels, Lloyd’s has also asked UK regulator the Prudential Regulation Authority (PRA), to approve plans to loan it around £110mn next year.
