Insurer RSA shelved plans earlier this month to change its status here from a separately capitalised and regulated subsidiary in Ireland to a branch operation of its UK-based parent company following the decision by British voters to exit the European Union.
RSA had been due to go before the High Court on July 5th to secure permission to transfer the activities of RSA Insurance Ireland Ltd to Royal & Sun Alliance in the UK.
While this would not have affected the status or rights of the company’s customers or staff, it would have involved the legal transfer of policyholders to the UK business.
RSA had planned to write to policyholders to notify them of the change. The move would have changed the Irish company’s status from that of a subsidiary to a branch, using EU rules to passport its services into Ireland from the UK.
By becoming a branch of the UK company, RSA would no longer have had to be separately capitalised in Ireland or required to have its own board of directors.
Its prudential regulation would have switched to the UK although it would still have been regulated by the Central Bank of Ireland for conduct of business reasons.
Change of heart
However, the Brexit result forced RSA’s parent company into a change of heart and the status of the Irish subsidiary remains unchanged.
In March, London-based RSA made €90 million available to the Irish business, if needed, to bolster its balance sheet under new insurance capital rules, known as Solvency II.
It had injected €423 million into its Irish subsidiary from 2013 to 2015 following an accounting scandal that involved the exit of a number of senior executives here.
Separately, Mark Wilson, the global chief executive of rival UK-based insurer Aviva, has said the company might have to reverse its branch structure in Ireland following the Brexit result.
As part of a capital markets day for analysts and investors hosted in London last week, Mr Wilson said: “So let’s talk about Brexit. In structural issues, we do not expect any significant impact. So the vast majority of our businesses are locally incorporated and regulated and we have limited reliance on passporting of services across jurisdictions.
“Now we may have to think about how we structure Ireland, as just last year we made that a branch. So we’re going to have to go back and look at that now.”
Aviva’s structure in Ireland began to change in 2013, with the life insurance part of the business becoming a branch last year.
In response to a query from The Irish Times, Liberty Insurance, which has operations based in Northern Ireland, said it had undertaken a "detailed assessment" of the impact of Brexit on its business.
“To mitigate against any immediate risk, we have pursued a number of initiatives,” it said. “We are also closely monitoring all bond performances and will continue to take necessary action as required.”
Liberty supports Insurance Ireland’s call for a dedicated stakeholder consultative forum on finance and insurance to “inform” the Government’s approach to Brexit.
