SWISS RE: WHY WE CHOSE LUXEMBOURG
Swiss re has a strong presence in Europe and is the world’s second largest reinsurance company. Established in Luxembourg in 2007, it is home to its EEA head office, from where Swiss Re coordinates its regional branch network. The global insurer has more recently started a new capital markets unit in Luxembourg to maintain access to the eu single market after Brexit. We sat down with Lize-Mari Barnes, Chief Financial Officer Luxembourg, to find out how the business is developing.
LFF: WHAT ARE THE REASONS FOR CHOOSING LUXEMBOURG FOR YOUR EU HUB?
We used to have local companies in a number of European countries and came to the conclusion that having a base in one place would be much more efficient. EU regulation and the Freedom of Establishment allows us to work from a single base.
The open business culture and fluent language skills made Luxembourg a natural choice.
“The open business culture and fluent language skills made Luxembourg a natural choice.”
Luxembourg was not new to Swiss Re as we already had a small presence established in Luxembourg. We moved to Luxembourg with our first carriers in 2007. The European market contributes approximately one third of the Group’s activities and Luxembourg is home to its EEA head office.
LFF: WHAT ARE YOUR ACTIVITIES IN LUXEMBOURG?
Within Swiss Re we have three different business units: Reinsurance, Corporate Solutions and Life Capital.
Each of these business units have their main European Legal Entity based in Luxembourg. In total we have five Re (Insurance) carriers that are supervised by the Insurance regulator, CAA. In addition to that, Swiss Re has various other Treasury and Financing companies in Luxembourg as well as companies regulated by the CSSF.
LFF: HOW ARE YOUR ACTIVITIES EVOLV ING?
We have implemented significant changes to Swiss Re’s risk portfolio over recent years and have continually adapted the portfolio in line with current market developments based on our continuous and consistent monitoring of capital allocation.
Swiss Re continues to explore new risk pools and new opportunities, in line with our purpose “to make the world more resilient” which leads to the need for new ventures, new entities and capital allocation accordingly. Luxembourg plays an important role in implementing Swiss Re’s strategic decision-making at a European level.
"Luxembourg is at the forefront of certain geopolitical developments, such as Brexit."
For example, our B2B2C risk-tech entity iptiQ is headquartered in Luxembourg. Luxembourg is at the forefront of certain geopolitical developments, such as Brexit. Our Luxembourg entities operate with branches in the UK and Swiss Re is actively engaging with various stakeholders and regulators on our post Brexit operating model.
LFF: WHERE DO THE EXPERTISE OF THE LUXEMBOURG TEAM LIE AND HOW DO THESE COMPLIMENT THE GROUP?
In Luxembourg we are close to 50 employees representing nearly 20 different nationalities and related different languages.
The expertise of the Luxembourg team lies in managing large and small legal entities end to end, with very close relationships and interactions with other teams across the globe, including asset management, treasury, tax and various others. In Luxembourg we also manage important relationships with key stakeholders such as the various Board of Directors, Regulators etc. Furthermore, we manage large and complex carriers, with specialty in finance, legal, actuarial and tax.
"In Luxembourg we are close to 50 employees representing nearly 20 different nationalities and related different languages."
We focus on balance sheet and capital management, with capital allocation being an important topic for Swiss Re as a group. We also share our knowledge in specific areas, such as Solvency II or various accounting and legal frameworks, with our client management and other teams, to be used when they work on developing solutions for our clients.
LFF: IN LUXEMBOURG, HOW DO YOU WORK ALONGSIDE THE INSURANCE REGULATOR?
Having a separate Insurance regulator has been hugely beneficial for us. Due to the in-depth knowledge and expertise on both sides, as well as accessibility of the Regulator, it allows for very strong interaction and communication on various industry and company specific topics. These topics are often very complex
which emphasises the value of a dedicated regulator. This was an important differentiating factor when Swiss Re considered the location of its European headquarters some years ago and continues to be a differentiating factor.
LFF: CAN YOU ELABORATE ON THE INTERACTION OF THE LUXEMBOURG OFFICE AND THE TEAMS BASED IN OTHER COUNTRIES?
Colleagues in the Luxembourg office interact with various teams across the globe on a daily basis. Swiss Re’s business model relies on certain centralised and other decentralised functions for optimal use of expertise and sharing of knowledge. The
Luxembourg entities are also often pioneers for new initiatives and/or opportunities and again we work with teams across the globe to pull on relevant expertise and make it a success.
LFF: WHY HAS SWISS RE SET UP A NEW CAPITAL MARKETS UNIT IN LUXEM BOURG?
Swiss Re Capital Markets Europe is a response to the UK leaving the EU. That requires moving the European base of two businesses in which Swiss Re is a market leader: weather protection and insurance-linked securities. Those involve regulated derivatives relating to weather and to natural catastrophes and other insurance and re-insurance risks. The company will now be trading those from Luxembourg, where formerly they were traded from London. The company is regulated by the CSSF.
LFF: HOW IMPORTANT IS SUSTAINABLE FINANCE AND RESPONSIBLE INVESTING TO YOUR STRATEGY?
Responsible investing makes economic sense. Our experience shows that investing sustainably is a win-win for the company (i.e. shareholders), and for society at large. Institutional investors can not only profit from this, but by redirecting their significant capital flows they can also play a decisive role in making the world more resilient. We are one of the first re-/insurers that switched to ESG benchmarks broadly. We continue to advocate and actively contribute to a joint effort of the public and private sector, thinking and acting globally to overcome the hurdles preventing many investors from investing responsibly and with a long-term focus.
“Responsible investing makes economic sense. Our experience shows that investing sustainably is a win-win for the company and for society at large.”
LFF: TECHNOLOGY IS CHANGING BUSI NESS MODELS RAPIDLY. HOW ARE YOU HARNESSING FINTECH AND INNOVA TION TO DEVELOP YOUR BUSINESS ACTIVITIES?
Technology is our enabler and diversifier in these transformative times. We’ve invested significantly in technology over the past few years and we believe it will have a very positive impact on our business in the future. It will allow us to deliver better
products to clients and help us build greater societal and financial resilience around the world. Insurance may never be an impulse buy, but I envisage a future not too far away where you can purchase almost any type of insurance as easy as you can book a hotel.
LFF: LUXEMBOURG SAW THE ARRIVAL OF 12 OTHER NEW GLOBAL INSURANCE AND REINSURANCE COMPANIES, WHICH DECIDED TO MOVE THEIR EUROPE AN HEADQUARTERS TO THE COUNTRY AHEAD OF THE UK’S DEPARTURE FROM THE EU. HAS THERE BEEN AN IMPACT ON THE INSURANCE ECOSYSTEM?
We have seen a significant number of insurance and reinsurance companies setting up new bases in Luxembourg. Although it is not clear when the UK will depart the EU, the additional focus and development of the insurance ecosystem in Luxembourg is to be welcomed. We believe that the fact that so many companies have made the choice to locate in Luxembourg highlights the quality of the available resources and regulatory framework.
“Luxembourg feels like a fairytale village when the sun sets and over weekends, and like a large international city during the week.”
The growth in the ecosystem should further support this and provide further recognition of the strength of the insurance environment in Luxembourg as a base for Europe.
LFF: WHAT DO YOU APPRECIATE MOST ABOUT LIVING AND WORKING IN LUX EMBOURG?
From a professional perspective, I enjoy the diversity and international orientation in Luxembourg, as well as the open-mindedness and business focus of the people here. I always say: Luxembourg feels like a fairytale village when the sun sets and over weekends, and like a large international city during the week working hours. This is due to all the professional opportunities it offers, which can compete strongly with any other large financial hub. From a personal perspective, with a recently expanded family, I appreciate the safe and secure environment from various perspectives, the good quality life as well as all the different and exciting opportunities that Luxembourg as a small country has to offer.