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XL Catlin to redomesticate to Bermuda

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XL Group P.L.C. on Monday said it intends to change the location of its incorporation to Bermuda from Dublin.

The insurer and reinsurer, which does business as XL Catlin, said the move reflects the greater concentration of Bermuda-based operations in its balance sheet since XL's acquisition of Catlin Group Ltd. last year and Bermuda being recognized last November as having full regulatory equivalence under the European Union's Solvency II regulatory regime.

The move by XL Catlin goes against the trend of the past 10 years where several insurers and reinsurers with major operations in Bermuda have redomesticated to domiciles in Europe.

To effect the move, a new Bermuda exempt company, XL Group Ltd., will replace XL Group P.L.C. as the ultimate holding company for XL Catlin, the insurer and reinsurer said in a statement.

It said that, subject to shareholder and regulatory approval, the move would take place by the third quarter of 2016, adding that the change was expected to have no material impact on its financial results including its global effective tax rate.

XL Catlin shares will continue to trade on the NYSE.

“Establishing our corporate home in Bermuda is a natural step for XL. XL has had a presence in Bermuda since 1986, which grew significantly following the transformative transaction with Bermuda-based Catlin last year,” CEO Michael S. McGavick said in the statement.

In a filing with Securities and Exchange Commission, XL Catlin said it had consulted with its regulator in Ireland, the Central Bank of Ireland, and the Bermuda Monetary Authority, the Bermuda financial regulator.

“XL Ireland engaged in numerous discussions with the CBI regarding group supervision following which XL Ireland and the CBI concluded that the BMA would be best situated to serve as the XL group of companies' group wide supervisor and be in a position to approve the XL group of companies' internal capital model,” the filing states.

In addition, Bermuda has a long history as an insurance and reinsurance market and its regulatory credentials were buttressed by its winning Solvency II equivalence.

The filing states: “The long-term stability of Bermuda's legal and regulatory environment mirrors that of Ireland. Bermuda's legal and regulatory history as a financial services and insurance and reinsurance hub is particularly strong. The European Commission's determination of full Solvency II equivalence, including group supervision equivalence, for Bermuda strongly supports the Board's determination that Bermuda is a respected member of the international (insurance and reinsurance) and regulatory community.”

Although XL established its headquarters in Bermuda in 1986, its original domicile of incorporation was the Cayman Islands. It redomesticated to Ireland in 2010. In an SEC filing at the time, XL said the move to Ireland was in part driven by a desire to disassociate itself from tax havens and that Cayman did not have tax treaties with the United States and the European Union.