Atrium's Approach to BREXIT
With the UK government invoking Article 50 in March 2017, this would mean that without extensions, or agreement of the Withdrawal Agreement and Transition Period, the UK will formally leave the European Union on 29 March 2019 (“Hard Brexit”). As a direct result of this decision Atrium’s Board formulated a contingency strategy and work programme and has planned on the basis of a worst case / hard Brexit. A key implication of Brexit is the loss of ‘passporting rights’ which allows Lloyd’s of London and Syndicate 609 to conduct cross-border business throughout the European Economic Area (EEA).
In order to provide continued access to Lloyd’s for policyholders within the EEA, Lloyd’s has set up a subsidiary in Brussels (Lloyd’s Insurance Company S.A.). Atrium has worked closely with Lloyd’s on this contingency arrangement. Lloyd’s Brussels is an insurance company authorised and regulated by the National Bank of Belgium and regulated by the Financial Services and Markets Authority. The subsidiary is fully capitalised and assigned the equivalent financial ratings as Lloyd’s from A.M Best (A), Fitch (AA-) and Standard & Poors (A+).
Syndicate 609 has incorporated the essential changes required by Lloyd’s throughout the organisation to be business ready to uphold our reputation by providing the best possible service to brokers, coverholders and policyholders.
Syndicate 609 is underwriting business incepting from 1 January 2019 domiciled or located in the EEA, which includes the 27 EU states plus 3 EEA states, on behalf of Lloyd’s Brussels. Syndicate 609 will underwrite EEA-located business to a new syndicate number of 5310, with business being 100% reinsured back to Syndicate 609. Atrium will continue to have full claims handling and settlement authority (on behalf of Lloyd’s Brussels). For EEA reinsurance business in the majority of circumstances Atrium should still be able to write this business cross-border from London on Syndicate 609’s paper in the event of a hard Brexit, although Lloyd’s Brussels is able to underwrite reinsurance business on a facultative and non-proportional basis.
All non-EEA business will be underwritten via Syndicate 609 in the current manner.
Lloyd’s have confirmed that they plan to transfer all legacy EEA business to Lloyd’s Brussels before the end of 2020 via a Part VII transfer. Whilst uncertainty remains about whether a withdrawal agreement will be reached before the UK exits the EU, the date of any exit from the EU and the terms of the future relationship between the UK and the EU, in the event that the UK leaves with no transition or implementation period Lloyd’s have advised underwriters to continue to honour their contractual commitments including the payment of valid claims. Lloyd’s expects that this will have the support of all European regulators as it goes to the heart of treating customers fairly.
There is still considerable uncertainty with the consequences of executing Article 50 and the current negotiations. Atrium has sought to appropriately mitigate the volatility of the resultant uncertainties from a withdrawal from Europe where known but as a result of the contingency arrangement put in place by Lloyd’s, Atrium’s Board is confident that Syndicate 609’s future performance should not be materially impacted by Brexit and that we will be able to continue to provide the best possible service to our policyholders, brokers and coverholder.
If you have any questions, including questions relating to particular classes of business, please ask your usual underwriting or claims contact or email us.