Lloyd's of London favours Luxembourg in European hub shortlist
Lloyd's of London has narrowed down its hunt for a post-Brexit European subsidiary, with Luxembourg emerging as the front runner following a crunch board meeting.
The move could see more than 100 jobs at the insurance market shifted from London to the continent.
Sources close to Lloyd's told the Press Association that Luxembourg has emerged as the favourite in a shortlist of five European hubs - including Malta, Dublin, Frankfurt and Paris - to house a portion of its business.
It would give Lloyd's of London access to the single market even if the Government follows through with plans for a hard Brexit.
The news comes just a week after a meeting of the insurance market's franchise board which is looking after progress of post-Brexit contingency plans.
A spokesman for Lloyd's of London said: "We are continuing to work through the options of establishing a subsidiary in the European Union and will provide an update to the market later this quarter on how that is progressing."
Lloyd's generates around 11% of its revenue in continental Europe and chairman John Nelson and chief executive Inga Beale have previously warned that losing single market access would be detrimental.
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The insurance market has been ramping up contingency planning in the hopes of unveiling a location for a potential EU subsidiary to its members by the end of the first quarter.
Lloyd's has not confirmed the exact number of staff that may be moved if the plan is approved, though a European centre is not expected to rival the size of its other hubs in cities like Singapore and Dubai.
The insurance market is set to outline the potential costs of a relocation when it suggests a new site to its members at the end of the first quarter, which could be in the tens of millions, covering higher operating costs, regulatory requirements, and capitalisation.
EU regulators may force Lloyd's to capitalise a subsidiary separately, which means a portion of its cash will be put into untouchable reserves that will underpin the business.
Experts have speculated that rival financial centres like Luxembourg, Dublin, Frankfurt and Paris could end up siphoning off some of the City's business as they court financial services firms ahead of Brexit.
Officials from the Paris region were wooing banks and fund managers in London earlier this week at the Shard to talk about the benefits of moving to France.
It followed in the footsteps of German authorities who met with financial executives in Frankfurt at the end of January to set out guidelines for setting up shop in the country after Brexit.