DUBLIN—Ireland's reputation as a stable, well-regulated insurance domicile with reasonable taxes is attracting interest from companies seeking more favorable tax treatment or worried about remaining in jurisdictions carrying the “tax haven” stigma.

XL Capital Ltd. is the latest insurer to make Ireland the new home for its holding company operations, announcing last week that it will leave the Cayman Islands in a redomestication expected to be completed July 1. The move does not affect XL's Hamilton, Bermuda-based operation.

XL's move comes after Willis Group Holdings Ltd. moved from Bermuda to Ireland, a redomestication it announced last September and completed this month. Willis Group Holdings P.L.C. now is the parent's name.

Ireland also was the domicile of choice last year for Beazley Group P.L.C., which effectively redomiciled to Dublin by incorporating a new parent company in Jersey that is a tax resident in Ireland.

Other companies likely are considering moving to the Emerald Isle, sources say.

“There certainly seems to be a trend,” said Catherine Thomas, managing senior financial analyst with A.M. Best Co. Inc. in London. Whether more companies arrive in Ireland may depend partly on how U.S. President Barack Obama's administration ultimately treats tax havens, she said. “It will be interesting to see what happens with legislation in the pipeline in the U.S. that could affect companies based in Bermuda and the Cayman Islands.”

Stuart Secker, tax partner at KPMG L.L.P. in London, said the move by XL is not expected to change its tax situation, at least in the short-term, but “it does offer options against some of the mood music coming out of the U.S. in attacking tax havens. It's a friendlier place to do business from,” he said of Ireland.

XL made the move, in part, to “reinforce our reputation” and “reduce certain risks that may impact us,” CEO Michael S. McGavick said in a statement. He did not elaborate during an interview on those “certain risks,” but referred to a Jan. 12 company proxy statement filed with the U.S. Securities and Exchange Commission that he said addressed those concerns.

In its proxy, XL said: “We are subject to reputational, political, tax and other risks because of negative publicity regarding companies that are incorporated in jurisdictions, including the Cayman Islands, whose economies have low rates of, or no, direct taxation or which do not have a substantial network of double taxation” or similar treaties with the United States, European Union or other members of the Paris-based Organization for Economic Cooperation and Development.

The proxy also said XL is concerned there could be legislative or regulatory changes that “could increase taxes for companies incorporated in jurisdictions such as the Cayman Islands.”

In announcing its move, Willis said Dublin provided “a more stable environment” and would improve its ability to “maintain a competitive worldwide effective corporate tax rate.”

Willis and XL said they were motivated to move partly because the Cayman Islands and Bermuda lack tax treaties with U.S. and E.U. members that Ireland already has in place.

Ireland is perceived to be more stable with those treaties in place, Ms. Thomas said. “Ireland has no reputational issue that it is just a tax haven.”

Ireland also is becoming attractive to insurers and reinsurers ahead of the implementation of Solvency II, Europe's risk-based capital framework scheduled for implementation in 2012, sources said.

A group support provision originally contained in the Solvency II proposal was removed, meaning insurance company subsidiaries will not be able to calculate whether their capital is adequate on a cross-group basis. That is leading some insurers to convert subsidiaries into branches of a group entity that will be held accountable for capital adequacy of the branch network.

Also last week, Zurich Financial Services Group Inc. said it is transferring most of its general insurance portfolios in Italy, Portugal and Spain to local branches of its Dublin-based Zurich Insurance P.L.C., the insurer's main risk underwriter in the European Union. It plans a similar transfer of its business in Germany later this year.

Such a “hub and spoke” type of operation “is becoming attractive to insurers and reinsurers,” said Sarah Goddard, CEO of the Dublin International Insurance Management Assn. Ltd. “That sort of model is one in which a number of companies are looking at. It simplifies corporate structures” but has little effect on operations in various jurisdictions, she said.

Jane Portas, regulatory director with KPMG in London, said she expects more companies to consider locating in Ireland to establish those kinds of branch operations as implementation of Solvency II nears. “I think what you are going to see is a lot of companies looking at their structures,” she said.

But, Ms. Portas noted, Ireland is not an automatic choice because “there are lots of different reasons why people move.”

Mr. Secker agreed, pointing out that the overall regulatory environment, taxes, infrastructure, availability of skilled workers and language are among those considerations.

All of those considerations make Ireland attractive to companies considering redomestication, Mr. Secker said.