Lloyd's of London chief says Brexit would hurt its business

Specialist insurance market Lloyd's of London would be less appealing to investors outside Britain if the country voted to leave the European Union, its chairman John Nelson said on Wednesday, as the group reported a drop in profit last year.
Lloyd's, which groups more than 80 insurance syndicates in the City of London, is making contingency plans for setting up offices elsewhere in the European Union in case of Brexit, Nelson added.
Lloyd's has seen investment into the syndicates from the United States and Asia in recent years. It also writes insurance for businesses world-wide, specialising in sectors such as marine, energy and aviation. "About 90 percent of our capital and business comes from outside the UK," Nelson told Reuters by phone.
"It would diminish our attraction as a market to invest in if we were not part of the EU."
Britons vote in a referendum on EU membership on June 23. A decision to leave would make it harder to sell insurance into the bloc without a local presence, Nelson said.
"We would have to restructure bits of our business, which would probably mean more representative offices to qualify within the EU, which would be expensive," he said.
Lloyd's of London reported a 30 percent drop in pre-tax profit in 2015 to 2.1 billion pounds ($2.98 billion), hit by a fall in investment returns and pressure on prices.
Investment returns dropped to 400 million pounds from 1 billion in 2014 and the trend was likely to continue, Nelson said.
"In the industry generally, you will see a new norm of low investment returns." Negative interest rates in the euro zone have encouraged some insurers to take riskier investment bets such as property or emerging market debt.
Nelson said Lloyd's needed to keep most of its assets in liquid investments and had limited scope to diversify.
The market's return on capital fell to 9.1 percent from 14.1 percent a year earlier, and its combined ratio, a measure of underwriting profitability, weakened to 90 percent from 88.4 percent in 2014.
A level below 100 percent indicates a profit. Gross written premiums rose 6 percent to 26.7 billion pounds.