luxembourg country profile

8/11/2019 LUXEMBOURG Country Profile

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Country ProfileLuxembourgwww.lloyds.com/LuxembourgMI

April 2014

[email protected]


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MAIN EXPORT PARTNERS: Germany 22%, France 16%, Belgium 13% (2011)

MAIN IMPORT PARTNERS: Belgium 30%, Germany 26%, France 11% (2011)

MAIN EXPORTS: Machinery and equipment, steel products,chemicals

MAIN IMPORTS: Minerals, metals, foodstuffs

FULL NAME / CAPITAL CITY: Grand Duchy of Luxembourg / Luxembourg

LANGUAGE: Luxembourgish, French, German

Source: Disaster Statistics based on: Prevention Web (2013); Export Statistics based on CIA World Factbook; Doing Business Indicators based on World Bank & World Economic Forum

KEY FACTS

GDP (PPP): US$ 43bn (Global Rank #95)

POPULATION: 0.5m (Global Rank #161)

IMF CATEGORISATION: Developed

DISASTER YEAR ECONOMIC COST (US$ x 1000)

Storm 1990 90,000

Storm 1990 90,000

Storm 1990 90,000

Storm 1990 90,000

Storm 2010 31,000

2012 Rank 2013 Rank Change in Rank

EASE OF DOING BUSINESS: 50 56 -6

COMPETITIVENESS: 23 22 1

FREEDOM FROM CORRUPTION: 11 11 0


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The ruling "Gambia Coalition" is adopting spending cuts, tax increases on high earners, a VAT hike, and measures to contain house-priceinflation. The Luxembourg Socialist Workers' Party (Ltzebuerger Sozialistesch Aarbechterpartei: LSAP), the liberal Democratic Party (Demokratesch Partei:DP), and the Greens (Di Grng: DG) agreed to form a government following elections in October 2013. The "Gambia Coalition" so named because the

different colours associated with the three parties match those of the Gambian flag marks the first time since 1945 (except 197479) that the governmenthas not been led by the Christian Social People's Party (Chrschtlech Sozial Vollekspartei: CSV). The coalition's agenda combines budget consolidation partly via a value-added tax (VAT) hike due in late 2014 to offset foreseeable shortfalls in e-commerce VAT revenues from 2015 with increased stateintervention in the labour (to tackle unemployment) and housing markets (to contain house-price inflation).

Banking sector's exposure to financial and Eurozone debt crises wil l restrain growth. Notwithstanding the current recovery of Luxembourg's GDPgrowth to roughly 2%, it will remain more subdued in 201415 than in pre-2008 times as financial institutions' operations notably corporate lending andcapital flows to investment funds are impaired by the damage inflicted on their balance sheets.

Government will continue on pro-EU policy course, protecting business-friendly environment.Any government will try to protect Luxembourg's status

as one of the most affluent countries in the world by looking to improve or at least preserve the business environment. The European Commission's attemptsto change Luxembourg's banking and tax regulations have encountered domestic opposition, although the government has conceded to the relaxation ofbanking secrecy and increased information exchange, in line with the Organisation for Economic Co-operation and Development's (OECD) progress towardsgreater co-operation to tackle tax evasion.

Luxembourg agrees to soften banking secrecy, consenting to adopt system of automatic information exchange with other countries from 1January 2015. This is the result of pressure from the OECD and other European countries, which have accused Luxembourg (and peers such as Switzerlandand Austria) of profiting from tax evasion and being tax havens. The introduction of automatic information sharing will probably result in a prior decrease andrepatriation of deposits. Banks will prepare themselves for the new "regime" in advance of the 1 January 2015 deadline, making it necessary for somedepositors to legalise their positions with the tax authorities in their countries of origin.

GROSS DOMESTIC PRODUCT (GDP)(nominal GDP levels in billion US$; Real GDP change)

For daily updates visit: > www.ihsglobalinsight.com

BUSINESS ENVIRONMENT INFORMATION(provided by IHS Global Insight, March 2014)

TOP-10 SECTORS (BY VALUE ADDED)(value added in billion US$ & 2014 Change in real %)

BUSINESS ENVIRONMENT

-4.1%

2.9%

1.7%

0.3%

1.3%

2.0%2.5% 2.3% 2.3%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

0

20

40

60

80

100

20 10 2 01 1 20 12 2 01 3 20 14 2 01 5 20 16 2 01 7 20 18

N/A
http://www.ihsglobalinsight.com/http://www.ihsglobalinsight.com/


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2009 MAJOR DIRECT INSURERS(Net Premiums in million US$)

2012 DIRECT GROSS PREMIUMS(Gross Written Premiums by Luxembourg-based entities only)

Source:Association:> www.aca.lu Source: Commissariat aux Assurances

The size of the non-life market in 2012 was around US$ 1bn for locally based carriers : With a population of only 490,000, the Grand Duchy of Luxembourg is thesmallest member of the European Union (EU) and Economic and Monetary Union (EMU). The countrys economy is based on substantial international activity, as exports andimports of goods and services are both very large relative to the economy. In addition, the financial services sector makes up more than a quarter of GDP. The insurancebusiness in Luxembourg is well developed, as major European insurance companies have their operations in Luxembourg. While there is also an active captive insuranceindustry in Luxembourg, the sector is nowhere near on the scale of Bermuda or the Cayman Islands. Based on Compound Growth Rates (CAGR), the market is estimated tobe worth US$ 1.1bn in 2013.

International foreign insurers: There are over 600 European insurance companies (including life) operating in Luxembourg, the main ones coming from the UK, Ireland,France, Germany and Belgium.

Broker market: Distribution is dominated by the agency system, and to a smaller extent, broker networks.

Local reinsurers: There are a number of locally established reinsurance companies in Luxembourg working largely in the captive sector.

Outlook: Growth in the insurance market is likely to be minimal, due to the high level of saturation, small population and lack of industrial facilities.

BUSINESS CULTURE GUIDE

> http://www.kwintessential.co.uk(View Resources> Culture Guide)

QUICK LINKS / USEFUL SOURCES

Insurance Market Profiles

> www.iii.org/international/profiles

Association of Luxembourg InsuranceCompanies> www.aca.lu

Insurance Companies Commission> www.commassu.lu

Lloyds Agency Network> www.lloyds.om/agency

Lloyds Claims Team> www.lloyds.com/claims

INSURANCE ENVIRONMENT

11

23

25

25

29

44

48

124

224

318

AME

Chartis

D.K.V.

Allianz

Fortis

P&V

Baloise

AXA

La Luxembourgeoise

Foyer

2,402

1,926

1,150

398Motor

PA & Health

Property

Liability

MAT

Miscellaneous

Luxembourg2012

US$ 1.1bn
http://www.aca.lu/http://www.kwintessential.co.uk/http://www.iii.org/international/profileshttp://www.aca.lu/http://www.commassu.lu/http://www.lloyds.com/agencyhttp://www.lloyds.com/claimshttp://www.lloyds.com/claimshttp://www.lloyds.com/agencyhttp://www.commassu.lu/http://www.aca.lu/http://www.iii.org/international/profileshttp://www.kwintessential.co.uk/http://www.kwintessential.co.uk/http://www.aca.lu/


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A Type 3 office is defined as a Lloyd's office headed by aCountry Manager who in addition to meeting regulatoryrequirements in that territory also proactively supports thebusiness development objectives of the managing agentsin that territory.

Type 3

OfficeLloyds

Country

Manager

2013 GROSS SIGNED PREMIUMS*

Total US$ 131m

Reinsurance US$ 67mDirect US$ 64m

SOURCE: Market Intelligence based on *Gross Signed premiums; Xchanging (2014); unaudited figures based on country of origin and processing by calendar year; see Appendix for details

Mr Ralph Van HeldenBenelux Regional ManagerLloyd's Beurs - World Trade CenterBeursplien 37, Postbus 301963001 DD Rotterdam Netherlands

TELEPHONE: + 31 (0) 10 205 2110

EMAIL: [email protected]

*COUNTRY OF ORIGIN PREMIUMS

Policyholders are based or

headquartered in this territory;

Premiums may be written outside

this territory;

X Not necessarily where risks are locatedX May differ to what is reported to

local regulator (dependent on local requirements).

Gross Signed Premiums; Direct versus Reinsurance; in million US$

2009-2013 LLOYDS TOTAL PREMIUMS 2013 LLOYDS HIGH LEVEL CLASSES

Gross Signed Premiums; high level classes; in million US$

LLOYDS BUSINESS

1924

31

15

29

12

12

14

11

12

0

5

10

15

20

25

30

35

40

45

50

2009 2010 2011 2012 2013

Direct Reinsurance 1.4

3.0

0.4

3.0

14.3

6.6

10.4

0.5

1.4

0.0

0 5 10 15 20

Accident & Health

Aviation

Casualty Treaty

Casualty

Energy

Marine

Property (D&F)

Property Treaty

Overseas Motor

UK Motor
mailto:[email protected]:[email protected]


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2014 INDUSTRY EVENTS

IFASIC, 23-24 October

Verzekeringsbranchedag, November

NARIM / BELRIM / Inward visits , Ongoing

2014 LLOYDS EVENTS

Coverholder Event, Q3

COB Claims, 19 March

Maritime Event, 19 June

MARKET INTELLIGENCE

Available Market Intelligence products for this territory include:

Country Profile

Market Presentation

Country Roundup

Class Review Lite (work in progress)

LLOYDS OBJECTIVES

Enhance Benelux profile as a meaningful contributor to profitable growth in Europe. We continue to provide high quality service and support, based on strong relations andinteraction with Lloyds Managing Agents and the local insurance community.

Further build Lloyds profile in Benelux: To be achieved through profile raising activities, brand building activities and education.

Broaden distribution network: Enhance the number of coverholders and build relationships with new brokers, risk managers and potential coverholders.

Protect the Lloyds brand: By focusing on building relationships with Belgian regulators, employing new legal/compliance/regulatory assistant in the office. Also Investigatea business model for establishing a license in Luxembourg.

LLOYDS KEY INITIATIVES 2014

EVENTS & MARKET INTELLIGENCE

www.lloyds.com/LuxembourgMI
http://www.lloyds.com/BelgiumMIhttp://www.lloyds.com/BelgiumMI


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APPENDIX

MACRO-ECONOMIC & BUSINESS ENVIRONMENT DATA

Source:IMF (www.imf.org/external/data.htm), World Bank (http://data.worldbank.org/), IHS Global Insight.

Notes: GDP data on size and wealth of the economy is reported in Purchasing Power Parity (PPP)terms;this is the most accurate indicator of the true standard of living ineach country and therefore potential demand. To calculate this, GDP is converted from local currency to an international $ currency using PPP exchange rates rather than themarket exchange rate. The PPP local currency-to-international $ exchange rates are determined such that a standard basket of goods has the same price in international $terms in each country. This adjusts for the differing costs of goods across countries, when converted at market exchange rates.

INSURANCE MARKET DATA

Source:Reported data derived by Lloyds Market Intelligence team; original source is regulatory bodies, associations, third party information providers.

Notes:Data is reported in US$. For more information, see www.lloyds.com/comparecountries.

Exchange Rates Note: Where required, data has been converted to US$ using annual average exchange rates as per www.oanda.com.

LLOYDS PREMIUM DATA

Source:Reported data derived by Lloyds; original source is Xchanging (data therefore contains only premiums processed by Xchanging).Notes:Data is reported is US$, on a calendar year basis and is signedgross premiums. This differs from the data published in the Lloyds Annual Report, which is also on acalendar year basis, but is writtengross premiums and sourced directly from Syndicates. Differences are therefore (1) timing inconsistencies between signedand writtengrosspremiums; (2) inconsistent use of exchange rates by Syndicates and Xchanging; & (3) incompleteness of Xchanging data set for certain classes of business (a substantialamount of premium is not processed by Xchanging and missing from the REG 258 data set; this comprises, for example, UK Motor).

Exchange Rates Note:Data has been converted to US$ using monthly exchange rates provided by Xchanging.

Definitions:

Gross SignedPremiums: Original and additional inward premiums, plus any amount in respect of administration fees or policy expenses remitted with a premium butbefore the deduction of outward reinsurance premiums.

Calendar Year: Relates to the calendar year in which the premium, additional or return, is processed by Xchanging. This is irrespective of the actual underwriting year of

account, which is determined by the inception date of each risk.Country of Origin: Denotes the domicile of the insured party (i.e. the coverholder or policyholder). This is the country from which demand for the insurance / reinsuranceemanates, & is irrespective of the country to which the risk is classified for regulatory reporting purposes.

Example:A policy holder in the UK insuring a holiday home in France would be classified as a UK risk by Country Of Origin, but French for regulatory reportingpurposes. Similarly a risk incepting on 1st December 2007 would be classified at 2007 Underwriting Year of Account but may not be processed by Xchanging until 2008and so be allocated to the 2008 processing year.

ACCESSING THE DATA: to access the raw data in this document, and equivalent data for other countries, see www.lloyds.com/comparecountries .

DISCLAIMER: This document is intended for general information purposes only. Whilst all care has been taken to ensure the accuracy of the information, Lloyd's does not

accept any responsibility for any errors or omissions. Lloyd's does not accept any responsibility or liability for any loss to any person acting or refraining from action as aresult of, but not limited to, any statement, fact, figure, expression of opinion or belief contained in this document.
http://www.imf.org/external/data.htmhttp://data.worldbank.org/http://www.lloyds.com/comparecountrieshttp://www.oanda.com/http://www.lloyds.com/comparecountrieshttp://www.lloyds.com/comparecountrieshttp://www.oanda.com/http://www.lloyds.com/comparecountrieshttp://data.worldbank.org/http://www.imf.org/external/data.htm

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