American International Group plans to counter Brexit-related challenges by having it both ways.
The insurer said that starting in the 2019 first quarter, it will launch a subsidiary in Luxembourg to write business across the European Economic Area and Switzerland, but it will also maintain its existing UK operations. AIG’s exact Luxembourg launch date will be subject to regulatory approval.
Right now, AIG’s London operation—AIG Europe Ltd.—handles European business from the city and in branches across the European Economic Area and Switzerland. AIG noted in its announcement that the UK is its single biggest European operation, which is why it will still support European operations from there despite plans to also have a presence in Luxembourg.
“This is a decisive move that ensures AIG is positioned for whatever form the UK’s exit from the EU ultimately takes,” Anthony Baldwin, CEO of AIG Europe, said in prepared remarks. “AIG sees opportunity in the ongoing resilience of the UK market. At the same time, we are ensuring that our clients and partners experience no disruption from the UK’s EU exit.”
Baldwin added that AIG’s “Luxembourg company will be complementary to our existing structure and will be part of our single European module.”
AIG had disclosed in November that it might relocate its London operations due to Brexit.
The UK’s planned exit, or Brexit (“British exit”), from the European Union is propelling the move by AIG and other financial firms with a large London presence to look at establishing divisions in continental Europe to avoid any post-Brexit fees or other logistical problems.
A majority of UK voters cast their ballot in a June 2016 referendum to leave the EU, which helped create plenty of financial market uncertainty. Up until now, London has been a global financial center. But with its unfettered EU access in doubt, insurers and other parts of the financial sector have been exploring whether to maintain the status quo in London or establish EU corporate beachheads to maintain access to the continent.
Lloyd’s of London is among other insurance industry entities looking at launching a post-Brexit European subsidiary.