Hiscox Ltd will set up a new unit in Luxembourg in response to Britain’s decision to leave the European Union.

The island-based company, which is also one of the largest operators in the Lloyd’s of London market, said that all its European retail business will be written through the Luxembourg unit.

The setting up of the new unit will begin immediately, Hiscox said this morning, and it is expected to be up and running well ahead of the March 2019 Brexit deadline.

Hiscox stated: “Our existing European business, which comprises over 350 people across seven of the EU 27 countries, will continue to operate without interruption.

“In Luxembourg a team covering core functions such as compliance, risk and internal audit will be recruited to complement our existing structure.”

The company had said earlier this year it would choose between Luxembourg and Malta for the new EU unit. Luxembourg got the nod “for its pro-business position, strong financial services experience and well-respected regulator, and is close to many of our major markets”, Hiscox said.

The company’s head office is in Wessex House, on Reid Street, Hamilton, from where the company also runs reinsurance and alternative capital operations.

In its first-quarter interim statement, Hiscox said gross premiums grew by 17.3 per cent to £751.2 million ($970 million), driven chiefly by strong performance in the company’s retail segment.

Hiscox Re’s gross written premiums fell slightly to $269.3 million for the January-through-March period, down $10 million from 2016.

Hiscox Re and the ILS business saw “single-digit rate decreases across the board” during January renewals, Hiscox said. “Downward pressure was stronger in the international book, while declines in US property reinsurance rates have slowed,” the statement added. “In specialty and casualty reinsurance rates are relatively flat.”

Hiscox said it had seen no improvement in the rating environment for big-ticket business. It attributed the softness in pricing to a continuation of a lack of major loss events, excess capital and strong competition.

The company said the London market conditions were reminiscent of the 1990s and that this called for a “very disciplined approach”.

“We are shrinking across most lines where margins are evaporating and pulling back significantly in aviation, extended warranty and big-ticket property lines,” Hiscox said.

Bronek Masojada, Hiscox’s chief executive officer, said: “We have had a strong start to the year thanks to our long-term investment in Hiscox Retail, particularly in the small business sector.

“Hiscox London Market continues to face challenging conditions. Hiscox Re and ILS are finding opportunities. We remain disciplined and are carefully navigating our way forward.”