AIG Turns to Luxembourg as Brexit Makes U.K. Less AttractiveBy and
Luxembourg offers ‘stable economy,’ AIG Europe chief says
Insurer to retain presence in U.K. for business in that market
American International Group Inc., the global provider of commercial property-casualty coverage, said it plans to open an insurer in Luxembourg to write business in the European Economic Area and Switzerland once the U.K. exits the European Union.
“This is a decisive move that ensures AIG is positioned for whatever form the U.K.’s exit from the EU ultimately takes,” Anthony Baldwin, chief executive officer of AIG Europe, said Wednesday in a statement. “We are ensuring that our clients and partners experience no disruption from the U.K.’s EU exit.”
Financial firms are shaping their Brexit plans after Prime Minister Theresa May announced in January that the U.K. would leave the EU’s single market in 2019, likely spelling the end of passporting, where companies seamlessly service the rest of the bloc from their London operations. AIG currently writes business in Europe from a single insurer based in the U.K. The New York-based company has more than 2,000 employees based in London and has already been cutting staff there and in other cities as part of a separate cost-cutting initiative.
The reorganization is expected to be completed in the first quarter of 2019, and AIG will retain an insurer in the U.K. for sales in that market, according to the statement. Nicola Ratchford, a spokeswoman for the insurer, said the company has a few employees already in Luxembourg. She said there might be shifts in the leadership ranks in Europe, but that it is too soon to know how many workers will move, or to comment on real estate decisions.
AIG CEO Peter Hancock said before the Brexit referendum last year that he’d consider an operations hub in continental Europe if U.K. voters opted to leave the EU. Luxembourg is among European cities seeking to attract banks and insurers that are looking to open EU hubs.
“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,” Baldwin said in the statement.
AIG’s Europe segment had about $5.4 billion in operating revenue last year, about 11 percent of the insurer’s total, according to the company’s most recent annual report. The company advanced 28 cents to $63.73 at 10:11 a.m. in New York, narrowing its decline for this year to 2.4 percent.