U.S. commercial property insurer FM Global has approved to run a European hub in Luxembourg, a move allowing it to issue policies in the European Union and other countries following Britain’s decision to leave the bloc, the company said on Tuesday.
The license from Luxembourg’s regulators finalizes a process that FM Global began last year. In December, Luxembourg issued preliminary approval for the Johnston, Rhode Island-based mutual insurer to set up a unit but not to conduct business, the company had said.
FM Global, which earned $5.5 billion in gross premium last year, plans to continue many business operations in Windsor, west of London, Chris Johnson, an executive vice president in charge of FM Global’s European business, said in an interview in April. But its Luxembourg-based subsidiary, FM Insurance Europe, S.A., will issue policies in the EU and other countries, the company said.
FM Global’s move follows that of U.S. insurer American International Group Inc, which said in March that it would keep its main European headquarters in London and open a subsidiary in Luxembourg to cope with Brexit.
The Lloyd’s of London insurance market chose Brussels for its subsidiary.
They are among a number of insurers that had set up regulated subsidiaries only in Britain through which they have been able to sell insurance policies across the European Union from one EU country, using so-called passporting rights.
But insurers and other financial services firms no longer expect to be able to retain those rights after Brexit and have started planning EU subsidiaries, so they can continue to sell into Europe.
Luxembourg and Brussels, along with Frankfurt, Paris and Dublin, are touting themselves as an alternative base for firms wishing to retain access to the EU after Brexit.
FM Global chose Luxembourg for regulatory expertise, understanding of global business, and talent base, among other reasons, Johnson has said.