British insurer Hiscox has decided to establish a new subsidiary in Luxembourg to underwrite its retail business in Europe following Britain's decision to leave the European Union, it said on Tuesday.
The company, which insures a broad range of risks from oil refineries to kidnappings, said it would start setting up the subsidiary immediately and expected the process to be completed well in advance of March 2019.
Hiscox had shortlisted Luxembourg and Malta as potential EU bases but said on Tuesday that Luxembourg had been chosen for its pro-business position, strong regulatory base and central European location.
"This is going to be the centre of our European business, so it made sense to establish something physically closer to it rather than a bit far away," Chief Executive Bronek Masojada told Reuters. "(Luxembourg) is in the centre of Europe and it is close to major markets."
Earlier this month, Luxembourg, already a major asset management and financial services hub in Europe, said it was in talks with firms including banks, asset managers, insurance companies and fintech companies which wanted to set up shop.
Hiscox is at least the third large insurer to have selected Luxembourg as its EU location, following similar commitments by U.S. insurer American International Group and U.S. commercial property insurer FM Global.
Masojada said the insurer was using a mix of internal people and external consultants to execute its plans and would put capital into the Luxembourg subsidiary and retain some insurance risk there, allowing it to operate independently of London.
Hiscox said its existing European business, which comprises over 350 people across seven of the EU's 27 countries, will continue to operate without interruption.
Many insurers and finance companies have started planning new EU bases as they expect Brexit to result in the loss of rights to sell insurance policies and other products across the EU from bases in Britain.
The Lloyd's of London insurance market, where Hiscox is an underwriter, has chosen Brussels for its new EU outpost.
Hiscox said it would hire a team in Luxembourg covering core functions such as compliance, risk and internal audit in Luxembourg to complement its existing structure.
Masojada said Hiscox would initially hire at least six people in Luxembourg through the rest of this year in newly created roles, but said there were no definite job estimates for the longer term although he expected the base to grow over time.
He said Hiscox, which currently employs 1,200 people in Britain, 600 of whom are based in London, did not anticipate shifting any London jobs to Luxembourg.
(Reporting by Esha Vaish in Bengaluru, additional reporting by Carolyn Cohn in London; editing by Jason Neely and Jane Merriman)