Reinsurer Arch Capital Group To Relocate To Bermuda

Royal Gazette

13 September 2000

This story is reproduced by kind permission of the Royal Gazette at http://www.accessbda.bm

Arch Capital Group Ltd. has become the latest reinsurance company to redomicile from the United States to Bermuda.

Arch, formerly Risk Capital Holdings, said on Friday it had filed a registration statement and preliminary proxy material with the Securities and Exchange Commission to reorganise the company to become a wholly owned subsidiary of a Bermuda holding company and the stockholders of the Company would become the stockholders of the Bermuda holding company.

Arch, which is chaired by Robert Clements, one of the key people behind the formation of Bermuda insurers ACE Ltd. and XL Capital, had net income of $3.3 million on income of $128.2 million in the six months to June 30, 2000.

Arch is just the latest in a long line of US insurance and reinsurance companies that have moved to the Bermudas, primarily of course for tax reasons. Most of the companies that have moved have been relatively recent creations, without very heavy reserves - otherwise the transfer of reserves out of the US triggers a heavy tax bill. Older-established companies, which are thus prevented from moving (although nothing stops them starting up new companies in Bermuda) have vociferously protested to the Administration that they are on the receiving end of unfair competition from the Bermudian companies, who pay no tax and are able to udercut them. It is not clear whether the Administration will attempt to promote legislation to impede further companies from moving.

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