LONDON — Insurance giant AIG is putting in place plans to set up a new base in Luxembourg once Britain leaves the European Union and firms based in the UK lose their right to passport services across the European Union.
AIG — which employs around 65,000 people globally and has revenues just shy of $US60 billion — currently has its EU base in the City of London, but had been expected to set up a new hub in Ireland’s capital Dublin to cope with changes in the way financial services and insurance in the UK works.
However, the group has chosen Luxembourg for its new EU operation, marks a shift in the attitudes of insurers, who had been thought to favour Dublin as a base post-Brexit. AIG will keep its European headquarters in London, which is home to the world’s largest insurance market.
“Luxembourg, a founding member of the European Union, offers us a secure location in a stable economy with an experienced and well-respected regulator in continental Europe close to many of our major markets,” AIG Europe’s CEO Anthony Baldwin said in a statement.
“AIG sees opportunity in the ongoing resilience of the UK insurance market. At the same time, we are ensuring that our clients and partners experience no disruption from the UK’s EU exit.
“This is a decisive move that ensures AIG is positioned for whatever form the UK’s exit from the EU ultimately takes.”
Insurers with bases in the UK currently have the right to “passport” their financial licences in one EU market to another, preventing them having to go through the costly and complicated process of being regulated in each market where they operate.
The financial passport’s status is strongly tied to Britain’s membership of the European Single Market, and as a result is widely expected to be lost as part of any Brexit deal.
Consequently, many firms are looking to set up bases in EU nations, with Lloyds of London already confirming that it will have a new EU base after Brexit.
Lloyd’s, the non-stock market listed group which focuses on marine, energy, and political risk insurance, will set up a subsidiary in a country that will still be part of the EU. It also reportedly favours a move to Luxembourg, according to several media outlets.