The U.K. will block any attempt from “jealous” Europeans to constrain or tax its financial-services industry, Prime Minister David Cameron said as he pledged to support insurers over new European solvency rules.
“The threat is always there,” Cameron said to an audience of insurers and brokers at Lloyd’s of London today. “If I can’t get the safeguards I need for the single market, for financial services, for the things that Britain cares about, you’ve got to be quite prepared to say ‘no.’”
Cameron asked U.K. insurers to alert him to any potential issues with new drafts of Solvency II rules, which may force insurance companies to hold more capital against assets such as equities and corporate bonds. Prudential Plc (PRU), the U.K.’s biggest insurer, threatened in February to quit London if the rules overly penalize its U.S. business.
“Other European countries are frankly quite jealous of the financial-services industry that we have in London and the U.K.,” Cameron said. “It’s one of our premier industries. It has an enormous trade balance with the rest of Europe. There are often attempts to hobble our financial-services industry or indeed take some of it away, or alternatively tax it in such a way that would give the rest of Europe lots of money.”
Cameron vetoed a European treaty in December that he said threatened the continent’s single market and the U.K.’s ability to govern its financial-services industry. Separately, German Chancellor Angela Merkel and former French President Nicolas Sarkozy last year championed a financial-transactions tax that the European Commission said would raise 57 billion euros ($74 billion) a year.
“The financial transactions tax which keeps being peddled is something with huge amounts of money coming straight out of the U.K. and being spent in the rest of Europe,” Cameron said. His veto “demonstrated quite how much of a challenge from Europe in terms of regulation and we have to be very tough in fighting it off.”
Cameron spoke as Lloyd’s of London, the world’s oldest insurance market, set out a plan to become the top insurance and reinsurance center by 2025 as it expands regional hubs in emerging markets.
Lloyd’s will seek to grow at least in line with the gross domestic product of its developed markets, which include the U.S. and Europe, while writing more policies through overseas offices in some of the world’s fastest-growing countries, it said today in a statement.
“It is a strategy for growth,” Chairman John Nelson said in the statement. “Lloyd’s is a profitable international business but we want to make sure we become the true global hub for specialist insurance and reinsurance.”
Lloyd’s, founded in a London coffee house in 1688, is competing with the U.S., Bermuda and Switzerland to become the primary insurer of assets in emerging markets such as Brazil and China. Lloyd’s insurers are able to take advantage of the market’s credit rating and international licenses to sell insurance overseas.
The market will diversify its capital base to better reflect the contribution of revenue from higher-growth countries, Lloyd’s said in the statement.
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