The Lloyd’s of London insurance market is already working on plans to move some business to the European Union, aiming to be ready for the shift as soon as Britain starts divorce proceedings from the bloc, its chairman said on Thursday.

Britain is not expected to leave the EU for several years but the remarks from chairman John Nelson show how some financial players are acting rapidly due to the time it will take to set up operations in countries that remain in the bloc.

The world’s leading specialty insurance market said earlier this month it would have to operate some business from the EU after Brexit if Britain loses so-called passporting rights for financial companies based in the country to sell products across the bloc.

Lloyd’s, which started life in Edward Lloyd’s coffee house in 1688, and houses more than 90 insurance syndicates in a striking building in the City of London, is already preparing for that possibility, Nelson told Reuters.

“Our aim is to have a contingency plan so we can write business onshore in the EU ready by the time Article 50 is triggered,” he said by telephone.

“We’ve had on the shelf quite a few options, we are now refining those options,” Nelson said, without giving more details.

Prime Minister Theresa May has ruled out giving formal notification this year of Britain’s intention to leave the EU under Article 50 of the EU treaty, but has not given any clear guidance of her intentions beyond that.

Irish prime minister Enda Kenny said this week that members of the British government have indicated they may be ready to launch the formal negotiations as soon as January or February 2017. European Council President Donald Tusk has made similar comments, citing recent talks with May.

Once the exit process has been started, Britain has an initial two-year period to negotiate its departure. But Nelson’s remarks show that some financial players may not be prepared to wait for the outcome of those talks.

Syndicate Shelter

The syndicates which operate under the auspices of Lloyd’s offer specialist insurance and reinsurance in areas such as marine, energy and political risk.

They benefit from Lloyd’s strong credit rating and its licenses that enable the syndicates to sell their products across the globe.

The traditional market is still based on face-to-face contact during specified trading hours, unlike London’s stock market, which is fully electronic.

Around 11 percent of the 25 billion pounds ($33 billion) in gross premiums written last year by the Lloyd’s syndicates came from the EU, although it is insurance, rather than reinsurance, business that would be affected by the loss of passporting.

Reinsurers act as a financial backstop for insurers, helping them to pay for large damage claims from hurricanes or earthquakes in exchange for part of the premium.

Insurers have shown more willingness than banks or asset managers to disclose plans for post-Brexit moves to the continent.

Lloyd’s of London insurer Beazley has said it is planning an insurance subsidiary in Dublin, while rival Hiscox has said it would consider an EU-based insurance company.

To carry on selling insurance to EU countries, the most likely option is for Lloyd’s to turn one of its European branches into a regulated subsidiary, insurance specialists say.

Dublin is seen as the most attractive center for Lloyd’s to set up a European base, due to its proximity to London and the English language. The insurance regulator is also considered to be similar in operation to Britain’s Prudential Regulation Authority.

If Lloyd’s sets up operations in the EU, syndicates which operate only on Lloyd’s and do not offer other insurance business would not need to set up their own EU unit,insurance specialists say.

The regulatory process of setting up an insurance subsidiary could take up to a year, they added, while recruiting staff could add to lengthen that timescale, saying firms could not afford to wait too long before making those decisions.

Lloyd’s posted a 22 percent rise in pre-tax profits to 1.46 billion pounds in the first half of 2016, helped by strong investment returns, it said earlier on Thursday.

But the market saw a sharp rise in its combined operating ratio to 98 percent, compared with 89.5 percent a year earlier. A figure below 100 percent indicates an underwriting profit.

Lloyd’s said claims had increased in 2016, mainly due to wildfires in Fort McMurray, Canada.

Insurance and reinsurance premiums have been falling in the past few years, as new capital, including pensions and hedge funds, comes into the sector, to take advantage of double-digit returns.

Lloyd’s has also been acting to fend off loss of its position in emerging markets by applying for new licenses across the world.

A 2014 report by the London Market Group, a trade body, showed London was losing market share in high-growth markets of Asia, Latin America and Africa. The British capital’s competitiveness in insurance was “under threat from other locations which are investing heavily,” it said.

“We’re in good shape, but it’s tough,” Nelson said. ($1 = 0.7647 pounds) (Editing by Adrian Croft and David Stamp)

Topics Excess Surplus Europe Reinsurance London Lloyd's