Wednesday, reinsurer XL Capital Ltd (XL) said that its planning to change its place of incorporation from the Cayman Islands to Ireland and re-name the company as XL Group plc.
The new Irish public limited company, XL Group Plc would then replace XL Capital as the holding company of the XL group of companies. It expects to complete the transaction on July 1, 2010.
The proposed re-domestication is subject to the approval of the company's shareholders and the Grand Court of the Cayman Islands.
Since reinsurance companies do not require a specific geographical location or extensive labor - to conduct business, they can easily be set-up in tax havens like Bermuda and the Cayman Islands. But with the recession and stricter laws preventing transfer pricing and skimming profits from higher-tax jurisdictions, the Cayman Islands may not be such an attractive position for re-insurers, said reports.
XL attributed the shift to Ireland's stable long-term legal and regulatory environment and its long corporate history in the country. XL does not expect the re-domestication to have any material impact on its financial results.
XL CEO Michael McGavick, said, "Among other benefits, we believe the proposed move will reduce certain risks that may impact us and offer us the opportunity to reinforce our reputation, which is one of our key assets, and to better support our global business platforms."
XL is currently trading at $17.82, down $0.47 or 2.57%, on a volume of 842,896 shares on the NYSE.
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