Chubb, one of America's largest insurers, has chosen to shift its European headquarters from the UK to Paris after Brexit.It is the first major insurance company to choose the French capital as its EU hub and the move is dependent on approval from the regulatory authorities and government.The company, which recently opened a new office in Reading in a bid to expand its local presence in the UK, declined to say how many staff, if any, would be required to relocate and said it would continue to have a "substantial presence" in London post-Brexit.

"Passporting" rights: the key to post-Brexit relocation

Banks and other financial firms are having to establish hubs within remaining members of the EU because of the assumption that, after Brexit, the UK will lose the 'passporting rights' that currently enable London-based companies to do business throughout the continent.Evan Greenberg, Chubb chairman and CEO, said, "Locating our European Union headquarters in France post-Brexit is a clear choice for us. Paris is the principal office for our continental European operations and we have a significant investment there in both financial and human resources, as well as a large portfolio of commercial and consumer insurance business throughout France. “Our many years of experience in the French market and working closely with the French regulators gives us great confidence in making this decision and reinforces our commitment to our staff, clients and distribution partners in both France and across the continent."

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Chubb, which operates in 54 countries, has a global workforce of 31,000 and has executive offices in New York and Zurich, as well as London. Its European workforce numbers 3,600.

Paris joins Frankfurt, Dublin, Luxembourg and Munich as top location for new EU hubs

Paris has been campaigning very publicly to try and attract financial institutions from London but has met with only limited success. Frankfurt and Dublin have emerged as the most popular locations for banks' new European hubs, while Luxembourg has proved a draw for insurers, with Liberty Specialty Markets, Tokio Marine Group, CNA Hardy, RSA and AIG all opting to move there. Meanwhile, MS Amlin, QBE and Lloyd’s have chosen Brussels, while Markel has selected Munich.Joseph Wayland, Chubb executive vice-president, said the company had decided on Paris after being encouraged by the assistance and cooperation offered by the French government. “We are confident that locating our EU base in Paris will ensure that Chubb is well positioned to serve its clients whatever the ultimate terms of the UK’s exit from the European Union,” he said.Benjamin Griveaux, France’s junior economy minister, welcomed Chubb's decision as "great news", adding, "It’s a very encouraging signal, especially because this is a US institution and because it is a head office. It follows other announcements, but what interests us is to build a long-term and sustainable strategy.”

The Macron effect

Geoffrey Maddock, partner at law firm Herbert Smith Freehills, told the Financial Times, “Pre-Macron, there was a feeling that (Paris) was a less business-friendly political environment than some other places, although that has eased. You can see why Chubb might have been encouraged by Macron’s reforms.”Insurance industry ratings agency AM Best said that, despite the fact many insurance companies were establishing new European hubs, London was likely to “retain its status as one of the world’s leading insurance centres” after Brexit, with most firms planning to move only a handful of staff to new EU offices.However, the EU’s insurance regulator EIOPA warned two months ago that insurance companies must not simply set up shell companies in the bloc with the primary purpose of routing business back to London.

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Read David Sapsted's article on Establishing Right to Remain – which discusses the uncertainty over immigration which the UK faces following Brexit – in the Summer 2017 issue of Relocate Magazine.

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For related news and features, visit our Brexit section.

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