The potential relocation of UK insurers away from Britain will turn “from a trickle into a flood,” says one analyst. Craig Scarr, Head of Insurance at accountancy firm Mazars warned that something needs to be done to stem the threat of new European capital rules, known as Solvency II.
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“The bigger concern is other insurers that are more European focused. Will they go anyway?” asked Scarr.
“We saw at the end of the last decade Aviva starting to move to Dublin. We saw Brit (insurance) move part of their business or their control functions over to Holland. The issue now though is far more than that. Many large insurers have got project plans that at least cost the impact of moving because of RDR (retail distribution review) and Solvency II.” he said.
The RDR is the UK's financial watchdog's major reform of the regulation of retail investment advice and is due to come into force on 1 January 2013.
These comments were made as the CEO of the UK’s biggest insurer, Prudential , said the group is considering moving its headquarters from London, possibly to Hong Kong, over Solvency II. Tidjane Thiam said: “Solvency II is an enormously complex undertaking. We love London, we're a British company and we've been here for 160 years. It's not a debate about London but about the things that are happening in Brussels. Without Solvency II we wouldn't be having this debate."
Prudential met forecasts Tuesday with an operating profit of 2 billion pounds ($3.12 billion) in 2011. The 7 percent increase in the insurer’s operating profit was due in part to growth in the group’s Asian operations. It was the first time that Prudential’s Asian division led the group’s earnings.