For many operating in the international financial services industry Brexit represents both a distraction from and disruption of normal business. Chaucer Dublin is a manifestation of this. As its General Manager Michelle Moore tells Finance Dublin, the Lloyds-based business is primarily interested in its ability to offer clients and brokers the greatest possible flexibility of service. Designed to deliver a Lloyd's alternative, the new company might well have been based in London had it not been for Brexit.
The General Manager of Chaucer Dublin, Michelle Moore, says that although Brexit was not the key driver behind the specialty insurer's decision to establish a new company, the choice of domicile was 'definitely influenced by Brexit as it might well have been located in London in the absence of Brexit.' Moore said that Chaucer had carried out its own due diligence on alternative EU locations for its new insurance company outside of London if Brexit were to happen. 'Dublin was chosen for all the reasons we're all familiar with, like proximity to London, the fact that it is English speaking, has common legal, regulatory and tax frameworks and the presence of the existing international insurance industry here,' she said. 'As we've been getting up and running the team has been spending a considerable amount of time in London and I think the folks in London have been pleasantly surprised about how easy it is to split our time. I've worked between Dublin and London for years. We often go across for day trips and it's a very easy thing to do. So the connectivity is definitely reaping rewards for us at the moment.' |  |
Chaucer selected Dublin quite early on as its preferred location outside of the UK as a non-Lloyd’s platform and our EU base, Moore said. 'One benefit of this new company is to provide Chaucer with a mechanism for addressing the risks associated with Brexit and providing it with access to EU business on the freedom of services basis.'
The primary driver, however, 'is the ability to offer clients and brokers the greatest possible flexibility of service'. In a few months time, she pointed out, all Lloyd's syndicates would be in a position to write EU business through Lloyd's Brussels when that opens. But having a company offering also opens up new distribution channels through non-Lloyd's brokers to Chaucer as well, she said.
Moore described the process of engaging with the Central Bank of Ireland as rigorous. 'We had a very good engagement with the Central Bank. They set high standards for the right reasons and I am pleased to say we were able to demonstrate we could meet them. They are a strong regulator which ultimately is always better for financial service companies to be operating in,' she said.
'There was certainly rigour, as you would expect. It's not an easy or a quick process, and they do set the bar high for everyone. But they're also aware of proportionality and that there isn’t a "one size fits all" approach across the industry.'
Moore added that a lot of the conversation with the regulator had been around ensuring that the CBI was comfortable that as a regulated entity Chaucer had sufficient substance, decision making and oversight in Dublin. 'Obviously we've been successful in doing that. We've recruited our key control functions that had to be in place at authorisation, and are now looking to grow the team over the next few years.'
Chaucer was the first insurer to go through the approval process under new EIOPA guidance designed to prevent regulatory arbitrage between domiciles and that 'probably moved the bar up a bit for us and everyone else' she said. She was also quick to pay tribute to IDA Ireland for its support and help throughout the establishment process.
The business structure contemplated initially will see all underwriting done through a UK branch, utilising the underwriting expertise already inherent in the Chaucer organisation in London. 'It's early days right now and we're in the process of applying for UK branch approval with the PRA as the next step and we hope to get that in a little while. There's a 60 day waiting period for that and we couldn't file it until the CBI had granted formal approval. It's likely that the Dublin company post-Brexit will write much of the EU book for Chaucer.'
Moore said the biggest potential areas of growth initially are in the credit and political risk area. 'It's written with large financial institutions who are very sophisticated insurance buyers and many of them have a preference for company paper for various reasons. We have a strong London team in this area which makes this a particular area of growth for us,' she said.
Chaucer is the international specialty arm of US-based The Hanover Insurance Group, Inc. In 2016 The Hanover wrote $4.7 billion of business, with Chaucer contributing just under $1.1 billion.
This article was published in the August 2017 edition of Finance Dublin.