Lloyd's of London to set up Brussels subsidiary as profits remain flat

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Insurance market Lloyd's of London is to establish a subsidiary in Brussels to maintain a presence in Europe once Britain divorces from the EU. 

The company confirmed the plans as it unveiled its full-year results, with profits flat for 2016 after the firm wrestled with "extremely challenging" conditions driven by pricing pressures.  

Annual pre-tax profits came in at £2.1 billion, the same as the year before, but gross written premiums lifted 11% to £29.9 billion over the period.

In line with the insurance industry, the firm said it was also impacted by Government changes to the way personal injury claims are calculated with its cut to the Ogden discount rate. 

Chief executive Inga Beale said the firm's results underscored a need to focus on delivering "real value for money" and reducing costs. 

She said: "This has been a year of challenge for the insurance sector with premiums once more under continued downward pressure.

"It is vital that the corporation does everything it can to support the market and make the platform attractive, whilst demonstrating value for money.

"Our collective focus must be on providing customers with the products they want, embracing innovation and modernisation.

Lloyd's decision to choose the Belgian capital as its preferred site for an EU base was made during a meeting of the firm's franchise board on Tuesday. 

It is believed the move will result in around 100 jobs being shifted from London, though that number could rise as the insurance market establishes itself in the Belgian capital.

It is understood that Luxembourg was also a strong contender on its shortlist, but was eventually ruled out alongside Malta and Dublin. 

Lloyd's of London chairman John Nelson told the Press Association last week that ''there's been a lot of enthusiasm from a number of EU countries for Lloyd's to come to their country'', and said that reputation for regulation was a factor in the selection process.

Lloyd's said it was aiming to start work at the Brussels office from January 1 2019. 

The move comes as the firm gears for a top-level change, with Mr Nelson stepping down and Bruce Carnegie-Brown taking up the role of chairman from June. 

Of the results, Mr Nelson said: "The challenge for all of us is to reduce the cost of conducting business because within the market this is impacting on already thin underwriting margins."

Despite posting flat profits, the firm said the result was still the fifth highest since the turn of the century and above the long-term average. 

It said it was also making progress on global markets, emerging as the leading player for excess and surplus lines in the United States, shifting half its managing agents to Shanghai and Beijing, and winning approval for a reinsurance office in Mumbai, India.