Reinsurance Leaders and the United Kingdom in a Post-Brexit World
By way of background, the UK joined the European Union (EU) in January, 1973 and on June 23, 2016 the UK voted to leave the EU. This is known as the “Brexit” (British Exit).
One of big concerns is the EU’s single financial passport or passporting which allows reinsurers and other financial services firms the ability to conduct business across EU member states, while establishing branch offices through one regulator in the UK.
Article 50 of the 2009 Lisbon Treaty sets out the process of withdrawal for an EU member state and it has never been triggered. The treaty allows for negotiations with a two year period. If no agreement is reached during that time, the other states can extend the negotiation period or Britain will exit with no deal in place.
The issue of continued access to the single EU passport is a matter to be resolved during the negotiations.
Many of the financial services and reinsurance groups have begun to weigh in on this historic vote. Some of their comments were as follows:
 |
Lloyd’s of London: – Lloyd’s Chairman John Nelson said “For the next two years our business is unchanged. Lloyd’s has a well prepared contingency plan in place and Lloyd’s will be fully equipped to operate in the new environment.” |
 |
Standard & Poor’s: – S&P Global Ratings said that the leave vote is not expected to lead to rating actions on UK insurers. They acknowledged that there would be a period of uncertainty, however. |
 |
British Insurance Brokers Association (BIBA): – The BIBA indicated that “This is an unprecedented situation for the UK and BIBA is conscious that this will create a considerable amount of work and concerns amongst members and their customers.” |
 |
Clyde & Co.: Andrew Holderness global head of corporate insurance Group at Clyde and Co. indicated that “Without passporting, the level of regulation will undoubtedly rise. It is also very likely that the overall demands on the regulators themselves will increases significantly. This will then have knock-on effect and could impact their speed of response to a range of issues such as requests for approvals and rule waivers and modifications.” |
 |
Allianz: Stated that “in the short run we expect severe financial market turmoil and also Michael Heise, Allianz Chief Economist stated that by acting in a collaborative manner “British and European policymakers can do much to reduce any disruptions to trade and capital flows”. |
This is a process that is in its early stages and it is uncertain how this very interesting development will turn out. Stay Tuned!!
 |
Leonard Hecht, CPA T (609) 520 1188 [email protected]
|
Ask Our Experts
To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.
