Lloyd’s of London’s Beazley Plc is working to get European insurance licenses for its Irish reinsurance business to allow it to operate throughout the European Union, even if Lloyd’s loses access to the bloc.
Insurers are making contingency plans after Britain’s vote last month to leave the EU left them facing the risk they could lose “passporting” rights that enable them to sell their products throughout Europe.
“We’re looking at getting the licenses for our EU reinsurance company in Dublin and have an EU insurance company, which will give us some protection for growing in Europe into the future, if there are problems with the Lloyd’s licenses,” Chief Executive Andrew Horton told Reuters.
Britain’s insurance and banking industries – the biggest in Europe – are seen as some of the sectors with the most to lose following the Brexit vote, due to their reliance on the passporting system.
Dublin is the favored alternative hub to London for insurers due to its geographical proximity and similar regulatory regime, as well as Ireland being an English-speaking country, industry specialists say. It is already considered an insurance center, with giant insurer Zurich having its European HQ there.
Ahead of the referendum, Lloyd’s, which groups more than 80 insurance syndicates in the City of London, warned that the specialist insurance market would be less appealing to investors outside Britain after a Brexit vote.
Beazley’s Horton said the firm’s main aim is to lobby with Lloyd’s to ensure that the Lloyd’s market manages to maintain the insurance licenses that allow it access to the EU bloc.
The company is keen to do all it can to ensure continued access to Europe as it hopes to replicate there the success of its U.S. speciality lines business – which covers niche types of insurance ranging from fine art to kidnap and ransom.
Beazley, which provides marine, casualty and property insurance and reinsurance, reported a 3 percent fall in first-half pretax profit as premium rates declined for much of the large risk business the company underwrites in London.
Gross written premiums, however, rose about 2 percent to $1.12 billion over the period, buoyed by strong growth of the firm’s speciality lines business in the United States, which accounts for about 85 percent to 90 percent of its specialty lines business.
Horton said Beazley expected its U.S. and UK speciality lines business to compensate for fewer premiums written in marine and property accounts in the second half.
Over the six months ended June 30, pretax profit fell to $150.2 million due to fewer catastrophes, against a record $154.5 mln in the first half of last year. The Canadian wildfire was the only significant catastrophe over the period, Horton said.
Shares in Beazley were up 1.4 percent at 392 pence at 0830 GMT, outperforming a 0.5 percent drop in the wider FTSE midcap index. (Additonal reporting by Carolyn Cohn.)