Hiscox, the British arm of a US insurance company, which has its UK base in Colchester, has confirmed that its Brexit planning strategy includes setting up a continental Europe subsidiary in Luxembourg.

While none of the company's 1,200 jobs in the UK are expected to be transferred/lost, the thinking behind the strategy is to enable the company to establish an EU subsidiary in the Grand Duchy to allow it to conduct retail business throughout the EU. It is expected that the company would look to hire circa 10 staff initially, in compliance, risk and internal audit; this is to complement the 350 jobs the group has in 7 EU Member States at present.

The company's business in the UK is primarily in underwriting general insurance (house, motor, business liability, etc.), with its EU services including liability cover against risks such as terrorism and kidnapping as well as cyber crime.

It is understood that the company chose Luxembourg over Malta as the base for its new EU hub.

The company's statement read "Today we announce that we will establish a new European subsidiary in Luxembourg in response to Brexit. All Hiscox retail business in Europe will be written through this new EU subsidiary. Our existing European business, which comprises over 350 people across seven of the EU 27 countries, will continue to operate without interruption. In Luxembourg a team covering core functions such as compliance, risk and internal audit will be recruited to complement our existing structure. The process of establishment will begin immediately. Subject to regulatory approval, we expect to complete the restructuring well in advance of March 2019 in order to ensure a seamless transition for our customers, brokers and business partners. Luxembourg was selected for its pro-business position, strong financial services experience and well-respected regulator, and is close to many of our major markets."

In a statement on 9 May, Hiscox Europe performed well, growing gross written premiums by 12.2% in constant currency to €99.0 million (2016: €88.2 million). "This was driven by very strong performance in Germany and Spain. Hiscox France is also back in growth after a challenging 2016. Cyber insurance in Germany and Benelux, specialty commercial in France, management liability in Spain and our direct and partnerships divisions have all experienced solid growth in the first quarter."