POLITICS & INSTITUTIONS - ECONOMY

Japanese insurer Aioi to come to Lux.



aioi_nissay_dowa_insurance_nagoya_tsurumai_building_20150517-01.jpg

The Japanese insurance group Aioi Nissay Dowa has announced it will establish a base in Luxembourg because of Brexit.Picture credit: Wikimedia Commons 

The Japanese group Aioi Nissay Dowa Insurance has decided to relocate to Luxembourg due to Brexit.

The group, part of MS&AD, will join 7 other insurance firms which have announced their intention to set up an office in the EU, Paperjam reported on 2 November.

It is the second Japanese company, after Tokyo Marine, to create a base in Luxembourg.

Aioi will keep a presence in London, but will create a new holding, Aioi Nissay Dowa Europe Limited, to get European passporting rights.

Aioi Nissay Dowa Europe Limited told Delano on 2 November:

“our focus is based around operating an insurance business in Europe centered on automobile insurance. This reorganization will enable us to continue to provide insurance products and services in a stable manner after Brexit. We do not expect any impact or change to our other offices or our existing UK based HQ as part of this process. We have chosen Luxembourg to be the basis for our EU company due to its central location, international business-friendly mind-set, and dedicated insurance regulator, all of which will help us to get up and running with minimal impact to our customers and employees.”

8 insurance groups in Luxembourg

Claude Wirion, the head of the grand duchy’s Commissariat aux Assurances regulatory agency told Paperjam magazine, in the September/October print edition, that the interest of insurance groups in Luxembourg was a surprise. He stated that they did not expect this. They thought they had a good chance, but they ignored how much British companies traded in these services with the EU, Wirion stated in the interview. He added that: “They had been very discreet on that issue.”

Most of these companies will operate in the non-life sector, which will become much more important in Luxembourg.

However, in terms of employment, these companies will initially start with just a few employees. They will have management and audit posts in Luxembourg, but not much more.

Luxembourg has become an attractive location for insurance groups because of its strategic location, its international experience and the competences of its regulator. Furthermore, the use of English is common in the sector. Jean-Michel Pacaud, insurance leader at EY Luxembourg, told Paperjam magazine:

“We have to mention the flexibility and reactivity of the CAA, and its accommodating attitude towards outsourcing. As far as it can inspect them, it won’t impede these new companies to continue working with their current subcontractors, wherever they are based.”

He added:

“The objective of these companies based in London is to get the licence for the EU before the end of 2018. Those who have not yet started the procedure before the end of this year risk getting serious problems.”

CAA will allow light structures in the beginning, which should be reinforced with time.

Marc Hengen, managing director at the Luxembourg insurance and re-insurance trade group Association des compagnies d’assurance et reassurance told Paperjam:

“Insurance is an important sector in the City; we have to assume therefore that the process is not yet over, and all the international actors based in London must make their choices in that sense.”