Artex has launched a protected cell company (PCC) in Malta to offer UK brokers a contingency plan in the event of a hard-Brexit.
In the event of a hard-Brexit, in which the UK leaves the European Union (EU) with no deal and without EU passporting rights, the facility would provide UK brokers with an opportunity to continue intermediating European business by setting up an intermediary cell within the PCC.
Artex has been considering the formation for the last four or five months and after gauging interest from the market, the company came to the decision that there was sufficient appetite to pursue the venture.
Paul Eaton, international business development director at Artex, suggested that the mid-sized UK broker market would most likely be their primary clients.
Eaton explained: “Smaller brokers with some European business may well decide it isn’t worth it anymore and the larger brokers will probably begin to make their own contingency plans or form their own European subsidiaries.”
“We are talking about mid-sized UK brokers and we think there is definitely appetite within that market for a facility that will enable them to keep broking European business.”
According to Eaton, Artex has watched the Brexit negotiations with interest and having seen insurers begin to consider their contingency plans, felt the opportunity may be there for a facility that assisted brokers with similar planning.
He said: “Part of our business is looking after managing general agents and broking business and clearly they have the same issues to deal with as insurers and reinsurers.”
“If there is a loss of EU passporting due to a no-deal there will be a number of UK brokers that have European business that they can no longer intermediate.”
Artex has already received some initial interest from the market with some brokers interested and, having formed the PCC, is now moving forward to the promotion and marketing stage.
“We are actively seeking brokers who want to do this because once we reach the point at which there is no more EU passporting, if that happens, then these brokers will want something ready to go and they will have can then wait three, four, five months–however long it takes to get a new cell through to carry on trading.”
Eaton continued: “People will have their own advice on Brexit, all we can do is to say look we have this facility and it takes a certain amount of time to put an application through the regulator.”
“We think close to three or four months to put an intermediary cell application through the regulator and that’s the lead time you need to think of in your business.”
“What we are encouraging brokers to do is to think about their contingency plans, if this is a facility that fits with their contingency plans then it would be great to have conversations with people about how that might work for them.”
Malta will remain an EU member state and will retain EU passporting rights in the event of a no deal Brexit and additionally has PCC legislation in place, making it an ideal location for the facility.
Eaton stated: “In Malta, Artex employ 12 staff. We are a large insurance manager and we have the expertise and the substance that will be necessary to make this venture work.”
