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Aspen Re chooses Zurich for European hub

Aspen Re, a subsidiary of UK (re)insurer Aspen Insurance Holdings Ltd, has announced plans to open a major office in Zurich, to act as the hub for Aspen’s European reinsurance activity.

The move confirms that Switzerland is gaining a march on London as the preferred insurance centre for (re)insurers seeking a foothold in Europe.

Aspen Insurance Holding’s CEO, Chris Kane views the opening of the Zurich office as an opportunity to better access European business. He said the move will “enable us to provide an enhanced and localised service to our European clients, and [provide a] solid base from which we can access countries in Central and Eastern Europe which are experiencing strong economic growth and, as a result, significant demand for insurance”.

The office, headed by Aspen’s former chief underwriting officer, Jacopo D’antonio , will employ up to 20 people in the next two years and will operate as a “one-stop shop”, integrating all lines of business under a single platform and business plan.

Aspen’s move mirrors that of other London and Bermudian (re)insurers who have recently established significant subsidiaries in Switzerland. Bermudian “Class of 2005” reinsurer Flagstone Re has teamed up with Sirius International to write excess of loss aviation reinsurance business in Zurich and Paris Re have also established a subsidiary in the capital. Others include Allianz Transfer Risk, Axis Capital and Partner Re.

Switzerland’s competitive advantages are derived from historical, economic and geographic sources. A long-established financial centre, Zurich is home to many reputable banks, (re)insurance companies and has a business-friendly regulatory regime.

Once again, the UK’s tax burden is thought to be a driver of (re)insurance companies from the London market to more favourable regimes. Swiss tax rates differ between cantons (autonomous administrative departments) and can be individually negotiated within a band, by (re)insurers.

Chris Waterman, senior director of Fitch Rating’s Insurance Group in London, believes that Swiss tax “works out between 3.9 percent and 25 percent” so, he adds, “even at the higher end it compares quite favourably with the rest of Europe.”

The growing popularity of Zurich comes at a time when the competitive advantages of London have been hotly discussed. Luke Savage, finance director at Lloyd’s recently highlighted the relative decrease in European corporate tax rates as a major factor in businesses eschewing London as their domicile of choice.

Charlie Cantlay, deputy chairman of Aon Re UK said: “I think the advantage may be geographical as much as anything. You’re right in the heart of Europe, a couple of hours flying time from the UK. If the tax and regulatory regime is comparable to elsewhere in Europe then the location could be the crucial factor.”

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