XL to Move Domicile From Cayman Islands to Dublin
Pointing to what it has described as advantages for its risk profile, reputation and global positioning, XL Capital Ltd. said it will move its domicile from the Cayman Islands to Dublin, Ireland.
XL Capital Ltd. (NYSE: XL), which will continue to operate out of Bermuda, also will change its name to XL Group plc. This entity will be the "ultimate holding company of the XL group of companies," XL said.
XL hopes to complete the move on July 1, 2010, after winning the consent of its shareholders and the Grand Court of the Cayman Islands. XL said the move is unlikely to affect its financial performance.
The group will continue to comply with the reporting requirements of the U.S. Securities and Exchange Commission. XL will also continue to be registered with the New York Stock Exchange.
"Some of the attractions we find in Ireland we matched to certain risks we see developing in Cayman," Michael S. McGavick, XL's chief executive officer, told BestWire. "In the end, Ireland is a member of the OECD [Organisation for Economic Co-operation and Development]. Ireland is a member of the EU [European Union]. Ireland has numerous trade and tax treaties around the world."
Ireland's established international position provides "the right calling card for us to have," McGavick said. "We're delighted with the opportunity to make this change and hoping that our shareholders approve it."
McGavick said there are "clearly certain risks in Cayman" when it comes to reputational problems associated with domiciles that are considered to be offshore.
XL does not expect any important effects on its operations or personal as a result of the change, McGavick said. "We already have very substantial operations in Ireland," he said. "We've been operating in Ireland since 1990, when it was really our gateway to Europe. And so Ireland has a long-standing place in XL Capital."
McGavick said the name change to XL Group will better reflect its role in insurance and reinsurance. "We're excited about all of these changes," he said.
XL is regulated around the world, depending on its activities, McGavick said. "But obviously Bermuda will continue to play a critical part in XL Capital," he said. McGavick expressed no concern about the current troubled state of the Irish economy. "We're aware of the challenges in Ireland right now," he said. "But we're also aware of Ireland's history and its resilience. We wouldn't make a decision of this importance based on any one point in time."
McGavick described the technical part of the move as "vast and complex." The overall issue, he suggested is the simple one of benefit for the shareholders.
McGavick declined to comment on possible disappointment in the Cayman Islands, saying, "I'll let others speak for themselves. But this is a decision about the future and the long-range strength of the company."
Ireland, which has developed into an important center of financial services over the past two decades, has attracted some big names in insurance.
Lloyd's insurer Beazley Group plc announced in February 2009 that it would move its domicile from London to Dublin. At the time Andrew Horton, Beazley's CEO, cited Ireland's "stable tax and regulatory environment" (BestWire, Feb. 18, 2009). Earlier this month, Willis Group Holdings Ltd. completed a reorganization that included moving its new parent company -- Willis Group Holdings Public Ltd. Co. -- to Ireland (BestWire, Jan. 4, 2010).
XL Capital Group has a current Best's Financial Strength Rating of A (Excellent).
[An interview with McGavick will be available Jan. 13 at www.bestdayaudio.com].
(By Robert O'Connor, London editor: [email protected])
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