Hiscox shortlists Malta, Luxembourg for EU base ahead of Brexit

Lloyd's of London underwriter Hiscox will choose between Malta and Luxembourg in the coming months to set up a new insurance base to service EU clients after Brexit

Hiscox chairman Robert Childs said that Malta and Luxembourg look like the best locations to set up a subsidiary
Hiscox chairman Robert Childs said that Malta and Luxembourg look like the best locations to set up a subsidiary

Lloyd's of London underwriter Hiscox Ltd was in talks with regulators in Luxembourg and Malta over setting up a new insurance base in one of the countries to service European Union clients after Britain leaves the bloc, its chairman said.

The company is planning to establish a new subsidiary somewhere in the EU to compensate for the expected loss of passporting rights from London. Hiscox, which underwrites a range of risks from oil refineries to kidnappings, said it expected to begin the process of incorporating the legal entity in the first half of 2017, so that it could write new business using the new base before the end of 2018.

"Looking from our business point of view at the moment, those two locations look to be the best," non-executive chairman Robert Childs told Reuters news agency, adding that the London market was navigating its way through a challenging trading environment.

Many London-listed insurers are drawing up plans to move some business to Europe if they lose their right to sell their products across the bloc due to Brexit.

Industry sources involved say many UK-regulated ship insurers are considering jurisdictions such as Luxembourg and Cyprus, while some other insurers have indicated that Dublin may be a favoured pick.

Hiscox said on Monday an EU base would help it grow and expand its European business, which employs 300 people, underwrites £174.7 million in premiums and has a combined ratio of 86.3%.

However, he does not expect to move a lot more people to continental Europe. “We already have 300 people who work for Hiscox in mainland Europe. The new entity is to support them.”

The Bermuda-based company reported a 24% rise in group gross premiums written to £2.402 billion for 2016, while net premiums rose 17% to £1.675 billion.

Childs said that the company was focused on growing its retail lines business, where it still had a relatively small share of the market in Europe, the UK and the United States.

Hiscox has focused on growing the retail lines business, which underwrites fine art and ransom to property and media, as big-ticket insurance businesses face rate pressure due to stiffer competition for larger premiums.

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