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Lloyd’s has confirmed that it will open a new office in Brussels in response to Brexit. Faced with the loss of passporting rights from its London home, the insurance market has decided to put its new operation close to the heart of EU decision making.
Lloyd’s said on Thursday that it expected the new subsidiary to be up and running in time for the January 2019 insurance renewal season.
Chief executive Inga Beale said:
It is important that we are able to provide the market and customers with an effective solution that means business can carry on without interruption when the UK leaves the EU. Brussels met the critical elements of providing a robust regulatory framework in a central European location, and will enable Lloyd’s to continue to provide specialist underwriting expertise to our customers.
The news came as the market’s annual results showed the scars of tough market conditions. Annual profits were flat at £2.1bn as a 12 per cent jump in premium income was offset by higher claims, mostly from Hurricane Matthew and the Fort McMurray Wildfire in Canada.
Lloyd’s combined ratio – a measure of claims and costs as a proportion of premiums – worsened from 90 per cent to 97.9 per cent in 2016.
The market’s return on equity fell from 9.1 per cent to 8.1 per cent.
Ms Beale said that the results demonstrated how critical it was for Lloyd’s to focus on underwriting oversight and cutting costs.
“This has been a year of challenge for the insurance sector with premiums once more under continued downward pressure. It is vital that the Corporation does everything it can to support the market and make the platform attractive, whilst demonstrating value for money,” she said.
John Nelson, who will soon step down as Lloyd’s chairman, said that:
In the years since we launched our long term strategy Vision 2025, our global reputation and brand has significantly strengthened; we have substantially improved our global market access; our modernisation programme has real momentum; our increased financial strength and overall financial performance is a tribute to the underwriting skills in the Lloyd’s market. All of this puts Lloyd’s in a strong position both to take advantage of the long-term opportunities available to us globally in the specialist insurance market and to face the many challenges we have.