Another insurer moves to Ireland

United America Indemnity is the
latest insurer to announce its intention of moving corporate headquarters to

UAI’s board has approved the move
to re-locate from the Cayman Islands, where it maintains a registered office
but no employees.

The insurer is the third company
since the beginning of the year after insurer XL Capital and data storage maker
Seagate that announced plans to relocate headquarters from Cayman to Ireland.

The proposal still has to be
approved both by the shareholders of the company and the Cayman Grand Court.

If the transaction is approved, UAI
will become a wholly-owned subsidiary of Irish company Global Indemnity plc.

UAI had previously considered a
plan to relocate to Switzerland.

The company said that a move to
Ireland will best serve the interests of UAI and its shareholders.

Like other companies that have
opted for relocation to Ireland in the recent past, UAI cited Ireland’s strong
international relationships and network of tax treaties including a double
taxation agreement with the US as motivation for the transaction.

This indicates that the main factor
influencing the move is tax certainty, as UAI may in fact face a higher tax
burden than in Cayman as well as the additional costs of the transaction.

There is concern that future US tax
legislation could target companies with significant US operations that are
domiciled in offshore jurisdictions without a substantial network of tax

“Ireland has a well-developed and
stable tax regime, the Cayman Islands has generally no system of direct
corporate taxation,” UAI’s filing document stated. “We therefore expect that
this change of incorporation will improve our global tax position by lowering
our exposure to possible changes in tax legislation directed towards companies
incorporated in countries that do not have a substantial network of commercial,
tax and other treaties and trade agreements.”

A significant number of companies
have switched from Bermuda or the Cayman Islands to Ireland in recent months,
including insurance broker Willis, management consultancy Accenture, healthcare
company Covidien and electronics company Cooper Industries.

XL Capital stated in January that
the insurer was subject to reputational, political, tax and other risks because
of negative publicity regarding companies that are incorporated in
jurisdictions that, like the Cayman Islands, have no direct taxation.

 “Additionally, there have been, and could be
in the future, legislative or regulatory proposals that could increase taxes
for companies incorporated in jurisdictions such as the Cayman Islands,” XL
said in January.

Comments are closed.