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Another int'l firm seeks exit from Cayman Islands

Published:Friday | February 19, 2010 | 12:00 AM

SAN JUAN, Puerto Rico:

nsurance company
United America Indemnity Ltd has announced it wants to shift its legal home to Ireland from the Cayman Islands, continuing a trend of international companies seeking exits from Caribbean offshore financial havens.

The Cayman Islands-based insurer plans to ask shareholders to approve the change at an upcoming meeting, saying Ireland offers a "sophisticated regulatory environment" and an extensive network of international treaties, among other reasons.

In a Tuesday proxy statement, the insurance company, which had previously been considering a move to Switzerland, said it would become a wholly owned subsidiary of Irish company, Global Indemnity PLC.

Earlier this month, Seagate Technology said it plans to move its place of incorporation to Ireland from the Cayman Islands amid increased international scrutiny of offshore tax havens. It said proposed United States legislation and regulatory measures "could increase our tax burden if we remained incorporated in the Cayman Islands."

Thousands of international companies and hedge funds have traditionally been incorporated in offshore financial centres in the Caribbean and elsewhere, drawn by low tax rates and banking rules and legal systems that make it easy to move capital around the globe.

But US and European lawmakers and regulators are weighing a number of proposals aimed at cracking down on abuses and collecting more tax revenue from multinational operations.

Sun-soaked Caribbean locales such as the Cayman Islands, the British Virgin Islands and the Bahamas have scrambled to sign new international tax treaties and defend an industry that has flourished as an alternative to tourism.

Negative outlook

Last month, global insurer XL Capital noted the increasingly negative outlook for offshore financial centres in a filing announcing its decision to switch its legal home from the Cayman Islands to Ireland.

Richard Murphy, a British accountant and founder of the blog Tax Research UK, said fear of a US crackdown is behind the shifts.

"The flow is to Ireland, it's real and it's happening. This looks like panic," Murphy said in an email, adding that Ireland is a popular choice because it is a low-tax jurisdiction without the stigma of a tax haven.

Ted Bravakis, a spokesman for the Cayman Ministry of Finance, said Wednesday that the British Caribbean islands remain a thriving offshore financial sector.

The Cayman Islands, which lies 150 miles (240 kilometres) south of Cuba, does not directly tax any of the roughly 80,000 companies registered there, and has no income tax or capital gains tax. Its offshore financial services sector accounts for about half of the islands' economy.

Other businesses that have recently shifted their holding companies include insurance broker Willis Group Holdings Ltd, moving to Ireland from Bermuda, and insurer ACE Ltd, which moved to Zurich, Switzerland, from Cayman.