Lloyd’s of London sees Brexit as ‘major issue’, mulls options

Lloyd's of London has described the UK's vote to leave the European Union as a "major issue for us", saying it is working on a plan to ensure it can still trade across Europe.

The specialist insurance market said that all options, including a new EU subsidiary, were on the table though it had ruled out a shift from its London base.

Lloyd's reported that while it was in "robust" financial shape, with pre-tax profits rising 22 per cent to £1.5 billion in the first half of 2016, market conditions remained difficult with the fallout from the referendum firmly at the top of its agenda.

It said that a £300-million contribution to profits from currency fluctuations during the first six months of the year, partly a consequence of the weaker pound after the Brexit result, was not sustainable.

Lloyd's said it would continue to trade within the EU under the current passporting regime until such time as the UK left the bloc, adding it had advanced its contingency planning to cope with whatever deal emerged.

It said, "Continental Europe will continue to be an important market for Lloyd's, as it accounts for 11 per cent of gross written premium and we fully expect to maintain our position in the new post-Brexit landscape.

"The referendum outcome has meant that we have re-prioritised work within the corporation to ensure we are using our resources appropriately."

As a result, it said it had decided to place on hold the planned launch of its insurance market index.

Chief executive Inga Beale said, "Clearly the UK's referendum on its EU membership is a major issue for us to deal with and we are now focusing our attention on having in place the plans that will ensure Lloyd's continues trading across Europe."

Away from the pressures on its future, Lloyd's said it had seen major claims increase in the first-half - primarily due to the destructive and disruptive wildfires across Canada in May. It did not release an estimate on its own exposure.

The total cost to insurers has been estimated by officials in Canada at C$3.6 billion (£2.1 billion).

In addition, Lloyd's also pointed to a fall in underwriting profit of £850 million compared to the first six months of 2015 - with premiums remaining under pressure.