American International Group, Inc. (AIG) has recently announced plans to locate an insurance company in Luxembourg, after initially considering Dublin, to ensure the continued smooth operation of its business across the European Economic Area (EEA) and Switzerland once the United Kingdom (UK) leaves the European Union (EU). AIG’s choice for Luxembourg may have been influenced by the country’s proximity to the insurer’s European clients, position as a founding member of the EU, seemingly stable economy and expertise in financial services and fintech. From 2019, AIG proposes to have two AIG subsidiary insurance companies in Europe – one in the UK to write UK business and one in Luxembourg to write EEA and Swiss business, with branches across the EEA and Switzerland. AIG currently writes business in Europe from a single insurance company based in the UK, AIG Europe Limited, which has subsidiaries in the EEA and Switzerland.
The UK is presently AIG’s largest single operation in Europe and the company aims to continue to support its European operations from the UK – a country which seems to be a core market for AIG’s business and a solid hub for investments and growth. Talking about the company’s future plans, Anthony Baldwin, Chief Executive of AIG Europe said: “This is a decisive move ensures AIG is positioned for whatever form the UK’s exit from the EU ultimately takes. AIG sees opportunity in the ongoing resilience of the UK insurance market. […] Our Luxembourg company will be complementary to our existing structure and will be part of our single European module. […] 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.” The proposed restructure aims to be completed in the first quarter of 2019, subject to regulatory approval.
American International Group, Inc. (AIG) is a leading global insurance organisation whose member companies presently provide a wide range of property casualty insurance, life insurance, retirement products, and other financial services to customers in more than 80 countries and jurisdictions. These diverse offerings include products and services helping businesses and individuals protect their assets, manage opportunities and provide for retirement security. AIG common stock is listed on the New York Stock Exchange and the Tokyo Stock Exchange. The company’s response to Brexit seems to reflect its proactive attitude towards potential changes resulting from the UK’s exit from the EU, by attempting to make the most of both worlds – maintaining its operations in the UK, which may reflect continued confidence in the UK insurance market, while creating additional opportunities in the EU. This move may also set the tone for other companies wishing to shape their Brexit plans in accordance with the Prime Minister Theresa May’s aim for the UK to leave the EU’s Single Market in 2019, which may influence the companies’ right to service the EU from their London offices.
Other financial institutions seem to also have plans to set up EU subsidiaries in order to continue selling their services across the bloc. For example, London-based asset manager M&G Investments has announced a commitment to launch a new legal structure in Luxembourg consisting of two entities – a management company and a firm to carry out distribution of the Luxembourg management company’s funds and services. The new legal structure aims to insure M&G’s fund managers and their investment strategies remain available to the company’s international clients post Brexit. Talking about the company’s future plans, Anne Richards, Chief Executive of M&G Investments, said: “With the launch of this range of SICAV funds, our international clients will be able to choose how they gain access to our fund strategies and their managers. […] It also ensures our European clients can continue to have access to our investment expertise after March 2019, regardless of the eventual shape of the trading relationship between the UK and the rest of the European Union.”
What message is AIG sending by creating a EU office in Luxembourg?