Insurer QBE is to set up an EU base in Brussels, dealing a blow to Dublin’s hopes of becoming a new centre for the industry.
Faced with a loss of passporting rights from London because of Brexit, many UK-based insurers have been looking for a new EU home.
QBE is the second major insurer to select the Belgian capital after Lloyd’s, the insurance market, announced in March that it would set up a base there.
The news comes just a day after UK-based RSA said it would set up a subsidiary in Luxembourg from which it will run its businesses in Spain, Germany, France and the Netherlands.
Dublin had initially been seen as the natural choice for the industry because of its language and legal system, as well as its proximity to London.
But in recent months, locations in continental Europe such as Luxembourg and Brussels have been more popular.
"Brussels is pretty compelling for us as our biggest existing European business is in Belgium," said Richard Pryce, chief executive of QBE's European operation. He said that the National Bank of Belgium, the regulator, had been "very pragmatic".
QBE already has 70 to 80 people in Brussels.
“It was important to us that we are in the centre of Europe. We have an operation that is scalable and we know the regulator. In the end it wasn’t a particularly difficult decision,” Mr Pryce said.
When Lloyd’s chose Brussels, its then chairman John Nelson said he expected other insurers to follow, although Mr Pryce says that QBE’s choice was unrelated to the Lloyd’s decision.
Mr Pryce would not comment on how many extra people the company might have to employ in Belgium, but he said that there would not be a reduction in the number of staff QBE has in London.
The new subsidiary is likely to be up and running by the end of 2018.
The fight to attract London-based companies is becoming increasingly bitter. In March, Eoghan Murphy, the Irish financial services minister, told the European Commission that rivals were engaging in "regulatory arbitrage".
Last week, one of the EU's top financial regulators, Steven Maijoor, said that businesses would not be allowed to use "letterbox" companies to access EU markets after Brexit.
Mr Pryce said that one of his reasons for choosing Brussels was the stable regulatory regime: “This has to stand for a long stretch of time. It has to be real and proper.”
QBE is also going to undergo a so-called “Part VII transfer”, in which existing policies are moved to the new entity as well as new business.
These transfers can make the process longer and more expensive, but remove a lot of uncertainty over what will happen to existing customers.
Some London-based insurers fear that they might have trouble paying claims to EU clients after Brexit, unless those policies are moved to an EU-based legal entity.
“Part VII is the right way to do it because it gives proper continuity to customers,” Mr Pryce said. “Because there is no information on transitional measures, we have to assume that we’ll stand on our own two feet for everything.”
(Copyright The Financial Times Limited 2017)
