Reinsurer Plans Move To Luxembourg

by Leroy Baker, Tax-News.com, New York

31 March 2010

Flagstone Reinsurance Holdings Limited, has announced plans to change the company's place of incorporation from Bermuda to Luxembourg.

Flagstone is the third important Bermuda insurance company to switch its place of incorporation to Europe, after Ace Ltd's Swiss redomiciliation in 2008 and XL Capital Ltd's move to Ireland, announced earlier this year.

Flagstone expected the redomestication to take place over several months following shareholder approval. "After careful consideration of this decision, our Board of Directors and management team believe that changing Flagstone's place of incorporation to Luxembourg is in the best interests of the company and its shareholders," said Flagstone's Chief Executive Officer, David Brown. "Luxembourg is a major financial center known for its stability as well as its financial sophistication, and we believe this move will increase our strategic and capital flexibility while maintaining our operating model and our long-term strategy. This change will have no impact on our operations and in particular Flagstone will retain its substantial offices and operations in Bermuda, where we have conducted business since our founding."

Brown also said he expected more Bermuda companies to make the move, particularly with Solvency II coming, but also said that Solvency II was not a factor in Flagstone's move to Luxembourg, as its operating companies were already headquartered in Switzerland, which had largely achieved regulatory equivalence.

Flagstone has operated in Luxembourg for most of its corporate history. Flagstone's existing office in Luxembourg will also become its corporate holding company office.

The company's reinsurance and insurance operations worldwide would continue to operate without material changes, and its principal operating centre would remain in Switzerland. Flagstone said it would continue to maintain underwriting and executive offices in Bermuda and recognized the important role that Bermuda played in the global reinsurance market. The company would continue to report its consolidated financial results in US dollars using US generally accepted accounting principles.

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