XL Group Incorporates in Ireland - Analyst Blog

The Bermudan insurance and reinsurance organization,

. (

) yesterday announced that it has shifted its place of incorporation to Ireland from Cayman Islands currently. The company has had significant operations in that country that it has grown in recent years.

The company has changed its name to “XL Group" from “XL Capital" but will keep trading on the New York Stock Exchange under the existing ticker symbol “XL". The company will continue its registration under the U.S. Securities and Exchange Commission (SEC) and will also maintain a compliance with the SEC reporting norms, reporting its financial results in US currency.

XL Capital’s shareholders will receive one share of XL Group for every share held. Once the incorporation is over, the company will have to hold more than half of its board meetings in Ireland as per the requirement, though the operation’s headquarters will be in Bermuda.

The transition, which was originally announced in January this year, is not expected to have any material effect on the financial results.

Many companies found Caymen islands attractive because of the tax benefits it provided and therefore incorporated their businesses in the region. However, increased scrutiny by the U.S. and European lawmakers aimed at cracking down on abuses and collecting more tax revenues from multinational operations have rendered the place unattractive. Moreover, the recession has hurt revenues for many islands in the British Caribbean, which could lead to higher taxes for companies based there.

Ireland is viewed favorably because of its sophisticated and well-developed corporate, legal and regulatory environment. Its long history of international investment and long-established commercial relationships, trade agreements and tax treaties with the European Union member states, the United States and other countries around the world make it all the more lucrative.

During December 2009,

(

) also changed its place of incorporation to Ireland.

Incorporation in Ireland offers benefits including a protection of XL Capital’s officers and directors from personal liability, asset protection, tax benefits and increased ability to effectively value and market the company. Ireland has recently experienced a boom in its technology and manufacturing industries as well as in its growing insurance market. Many businesses are mulling an incorporation of a business there.

XL is slated to release second quarter earnings on Jul 26, 2010. The Zacks Consensus Estimate for the quarter is currently pegged at a profit of 68 cents per share.