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Hannover Re Considers Switching To Ireland

by Ulrika Lomas, Tax-News.com, Brussels

14 September 2007


Hannover Re, one of the world's largest reinsurance companies, is considering switching its operations to Ireland or another low tax jurisdiction, the company's chief executive told a conference recently.

According to Bermuda's Royal Gazette, Wilhelm Zeller, CEO of Hannover Re, told a press conference at the annual reinsurance gathering, Le Rendez-Vous in Monte Carlo, that the $5.5 billion firm is considering moving from its present base in Germany, although he apparently ruled out a switch to Bermuda, which has seen a rise in incorporations recently.

"For us, the ideal location, from a fiscal point of view, would be Ireland," Zeller stated, although he added that setting up headquarters in Dublin could be costly.

While Ireland's low 12.5% corporate tax and location within the European Union is a big draw for reinsurance and other companies, Bermuda's 0% rate of tax has lured many insurance companies to incorporate in the jurisdiction from high-tax countries like the UK.

Last year, Lloyds of London underwriting firms Hiscox and Omega set up companies in Bermuda, citing the UK's the 30% income tax and its burdensome regulation. They were swiftly followed in January 2007 by another Lloyds firm, Hardy Underwriting plc.

Bermuda recorded a three-year high for reinsurance company incorporations during 2006, with an almost 10% increase in the number of new reinsurance companies incorporated in the jurisdiction over 2005, according to the Bermuda Monetary Authority.

A total of 82 new reinsurers were established in Bermuda in 2006. The majority of these new companies were large, highly capitalised reinsurers. Captive insurance companies also formed a significant proportion of the new incorporations.

The 82 new Bermuda incorporations for 2006 compare very favourably with figures recorded by other jurisdictions such as Vermont, which had 37, South Carolina with 29, and the Cayman Islands with 50.

A comprehensive report in our Intelligence Report series looking at offshore insurance is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report11.asp

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