Brit sets December date for Dutch redomicile
UK insurer Brit has laid out the timetable for its redomicile to the Netherlands in a reorganisation that it is expected will see a new holding company listed on the London Stock Exchange on 21 December.
Brit initially revealed the proposals to reorganise its corporate structure and take tax residency in the Netherlands back in March, setting it on the path to become the latest member of the Lloyd’s community to redomicile.
In an announcement to the London Stock Exchange today, the company confirmed Brit Insurance Holdings NV (New Brit) will become the new holding company for the group in a move Brit said would help it “to align its corporate tax rate with those of its global peer group”.
The company noted that Dutch companies pay no additional tax on the “majority” of overseas earnings and “enjoy a pragmatic regime dealing with income arising overseas”.
“A reduction in the group’s effective tax rate over time should enhance the return on New Brit shareholders’ equity and the prospect for New Brit’s shareholders,” it said.
Brit added that the move will “provide a favourable operating environment from which to further the group’s international development” that will include the expansion of its global footprint that currently includes a US managing general agent and a Japanese representative office.
Establishing a presence in continental Europe, meanwhile, “will enhance the group’s ability to attract a broader spread of capital in support of its specialist underwriting operations”, the insurer said.
Brit also announced a debt refinancinig, with the new three-year £175mn facility replacing its existing £150mn facility, and reiterated its existing policy of growing distributions per share in line with the longer term prospects of the group from a base of 15p.
Numis Securities analyst Nick Johnson, who welcomed the redomicile as “another step in management’s strategy to build an effective operating structure and maximise return on equity (ROE)”, noted that the company’s distributions are expected to be classed as capital reductions under the new regime, which would be free of Dutch withholding tax.
The redomicile will see Brit shareholders receive one New Brit share for each existing share they hold issued under a court sanctioned scheme of arrangement scheduled for a hearing on 18 December.
The most recent additions to the group of Lloyd’s insurers with non-UK domiciles were Beazley and Hardy.