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Zurich’s position on the BREXIT Referendum

01 July 2016

Even though the British people have chosen to leave the EU, the UK is a key market for our business globally. While some customers may be worried about what this means for their policies or investments, we remain committed to our customers, distributors, communities and employees in the UK.

Brexit sign

“We are a global insurer operating in over 170 countries and territories, and support the EU as a facilitator of free and open international trade. We saw Britain as an integral part of this and believed the EU to be stronger when it includes the UK.

“The process of the UK leaving the EU is likely to take years, so at the moment it’s far too soon to say what all the effects will be across our business. We have established a team to follow this closely and will provide information to customers, distributors and employees as the process evolves.

Please refer to the below Q&As for further information.

Why did your stance change throughout the campaign

Although we have always known there will be a cost associated if the UK votes to leave the EU, we are also trying to make our business less expensive to run.

It’s therefore become appropriate to highlight that in the face of cost pressures around the business, there may be some additional expenditure required now the UK has voted for Brexit.

Why does a Swiss company (ie outside the EU) have such a strong pro-EU stance?

We believe the EU provides a strong international trading environment. But it’s not just about being in or out, so much as the cost and time of moving away from the status quo.

Will Brexit change how Zurich works in the UK?

Zurich remains committed to the UK market.

We will need to assess what the outcome means for us as a business.

The UK leaving the EU means that it may be necessary to review the UKGI business’s status as a branch of our Irish business. As you’d expect, we will ensure the operational and legal structure of our business means we can continue to operate actively in one of our most important markets.

Will Zurich remain in the UK?

Zurich remains committed to the UK market.

Are my investments safe?

The investments made in Zurich products in the UK are held through companies registered and authorised in the UK. Zurich remains committed to our customers in the UK.

The performance and value of your investments, including any income your may receive from them; can go down as well as up. This means that you may get back less than you invest.

No guarantee is given for the performance of any investments.

I’m concerned about the value of my investments, what should I do?

The performance and value of your investments, including any income your may receive from them; can go down as well as up This means that you may get back less than you invest.

How the Brexit vote could impact your investments will depend on which funds you are invested in. We produce regular fund factsheets which show the value and performance of our funds.

You may have the ability to change which investments you hold depending on your particular investment or scheme. You should talk to your financial adviser if you need advice regarding your investment choices.

Zurich remains committed to our customers in the UK.

Does this change the default investment strategy or the availability of other funds such as European funds?

For default strategies managed by Zurich, we are working closely with our investment managers to assess the impact of the Brexit vote on our investment strategies and on the wide variety of asset classes that we invest in; covering both the short and medium term.

It is too early to comment on any changes that we might make to our investment strategies.

Any changes that we make to fund objectives will be communicated to our customers.

Does this mean Switzerland would also reconsider its decision about future EU membership?

Decisions on EU membership are for citizens to take through the Democratic process. If the Swiss Government were to revisit the question of Switzerland’s membership of the EU, it would be at that stage that we would consider the impact.

Will Brexit change your branch structure and tax liabilities?

The UK leaving the EU means that it may be necessary to review the UKGI business’s status as a branch of our Irish business. As you’d expect, we will ensure the operational and legal structure of our business means we can continue to operate actively in one of our most important markets.

Are your EU operations based in Ireland to avoid tax?

Profits generated in the UK are already subject to tax here, and we make a significant contribution to the UK Exchequer.

What tax do you pay?

As a consequence our total tax contribution is very considerable, ranging from profits taxes and payroll taxes through to transaction taxes.

Is the Brexit vote likely to make the UK a less attractive market to the Zurich Group in future? Are we likely to see the Group scaling back investment in the UK business, which could materially constrain the UK’s business performance in the near term; or, lead to the Group withdrawing from the UK market altogether?

We have said clearly that we remain committed to the UK market. The UK remains one of the key performers within the Group, and the Group has committed significant strategic investment into the UK business recently. In addition, the Group operates in many other countries outside of the EU, so has the experience of running businesses in markets where local laws and regulations differ. As such, Zurich remains a reliable company with which to do business. Notwithstanding this, the uncertainty surrounding the negotiations of the future relationship between the UK and the remaining EU Member States mean that this risk cannot be discounted.

How does Brexit affect Zurich’s European strategy?

The UK will remain a key market for Zurich even despite the UK leaving the EU. Therefore our business footprint in Europe will not change.

What costs will leaving the EU generate for Zurich?

When any change happens, there are likely to be costs associated with it. But it’s far too soon to say what costs there may be and how they may be incurred. There will be a period of at least two years for the UK to unpick itself from the EU and, like any other international business wishing to keep a presence in the UK, we would have to deal with whatever changes arise.

What is the likely impact on investor confidence and business investment?

Given the uncertainty a Brexit decision will create, stock, bond and foreign exchange markets are likely to see continued volatility, particularly in the short term. Whilst difficult to predict the level of volatility within financial markets and the impact, this is likely to be felt most keenly by our UK Life long-term savings and investment business due to the nature of the assets and liabilities held on its balance sheet.

It is likely that we will see an increase in the number of customers making portfolio adjustments but we will be encouraging all customers to obtain financial advice before making any investment decisions.

How will Brexit impact your investment strategy? Are there any actions you have taken to protect against a Brexit risk like you did for Grexit?

We believe that there are notable differences between a Brexit scenario and a Grexit scenario.

Grexit would have been a sudden and unprecedented shock for the Eurozone putting the whole concept of a common currency into question. On the other hand, while Brexit will undoubtedly create significant market volatility, it is unlikely that it would have a market impact on the same scale as a Grexit would have had, particularly as the UK is outside of the Eurozone area.

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