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AM Best weighs up insurers’ Brexit strategies

UK-based insurers that access European Union business are opening subsidiaries in other nations as part of their Brexit contingency plans, according to AM Best.

Dublin will be the European base for Beazley, Chaucer and Legal & General, while Lloyd’s, MS Amlin and QBE are planning subsidiaries in Brussels. Hiscox and AIG Europe are choosing Luxembourg.

AM Best says location considerations include proximity to clients, the ability to attract talent, the existence of already established branches, and the tax regime.

Despite Brexit, the ratings agency says London will remain a global insurance hub, given its “pool of underwriting talent and reputation for flexible underwriting”.

“London has attracted talent and expertise from around the world and is innovative, leading the development of new product lines such as cyber insurance.”

While insurers domiciled within the UK will no longer be directly subject to Solvency II regulation post-Brexit, AM Best expects the UK to be granted regulatory equivalency.

It does not expect to take ratings actions as a direct result of Brexit, but says the “economic and regulatory uncertainty, together with the prospect of higher barriers to trade, mean that overall Brexit is likely to have a negative impact on the industry”.

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