U.S. insurer AIG makes Luxembourg its EU hub to cope with Brexit

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By Carolyn Cohn | LONDON

LONDON U.S. insurer AIG plans a European
Union hub in Luxembourg following Britain’s decision to leave
the bloc, the biggest financial services firm so far to detail
such a move.

AIG said on Wednesday it would keep its main European
headquarters in London and open a subsidiary in Luxembourg,
which along with Frankfurt, Paris and Dublin is touting itself
as an alternative base for firms wishing to retain access to the
EU after Brexit.

“This … ensures AIG is positioned for whatever form the
UK’s exit from the EU ultimately takes,” Anthony Baldwin, Chief
Executive of AIG Europe said in a statement.

Major banks have said they plan to set up EU subsidiaries to
continue to be able to sell their services across the bloc, but
few have announced concrete decisions.

British bank Lloyds has said it is likely to
convert its Berlin branch into a subsidiary, and M&G, the fund
arm of British insurer Prudential, is setting up a
management company and distribution firm in Luxembourg.

AIG has previously said it was also looking at Dublin as a
possible EU hub and insurer Hiscox has said it will
choose between Luxembourg and Malta.

Lloyd’s of London, the world’s largest speciality insurance
market, is due to pick a location for its EU subsidiary by the
end of March, with Dublin and Luxembourg on its shortlist.

AIG chose Luxembourg for its proximity to the insurer’s
European clients, position as a founding member of the EU,
stable economy and expertise in financial services and “fintech”, an AIG spokeswoman said.

The switch would involve “changes at senior leadership
level”, she added, without giving more details. AIG currently
has a branch in Luxembourg with a staff of three.

Eighty-eight insurance companies and 216 reinsurance firms
have a presence in Luxembourg, according to financial
development agency Luxembourg for Finance.

“Over the coming months, we expect more companies to follow
in the footsteps of both AIG and M&G, whether in the insurance
sector, asset management, banking industry or in the fintech
space,” Nicolas Mackel, CEO of Luxembourg for Finance said.

AIG said the proposed changes were expected to be completed
in the first quarter of 2019, subject to regulatory approval.

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