Flagstone Reinsurance Eyes Luxembourg Move
Stating they will continue to maintain underwriting and executive offices in Bermuda, Flagstone Re today [Mar 22] announced they may change their place of incorporation to Luxembourg.
Flagstone Reinsurance Holdings Limited say its Board of Directors is recommending to the shareholders a plan to change the Company’s place of incorporation from the island to the European nation of Luxembourg.
Flagstone’s shareholders will be asked to vote in favor of the proposal subject to the U.S. Securities and Exchange Commission [SEC] declaring effective the proxy statement/prospectus that Flagstone expects to file in connection with the redomestication.
If approved by shareholders, and subject to certain regulatory approvals and the satisfaction of other conditions, Flagstone expects the redomestication to take place over several months following shareholder approval.
Flagstone has operated in Luxembourg for most of its corporate history and is familiar with its regulatory and legal environment. Flagstone’s existing office in Luxembourg will also become its corporate holding company office.
The Company’s reinsurance and insurance operations worldwide will continue to operate without material changes, and its principal operating center will remain in Switzerland. Flagstone will continue to maintain underwriting and executive offices in Bermuda and recognizes the important role that Bermuda plays in the global reinsurance market. Flagstone does not expect the redomestication to have any material change on its operations or financial results.
Below is the statement from Flagstone’s Chief Executive Officer, David Brown:
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.
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.
We are pleased to have the opportunity to increase our presence in Luxembourg, where our investment management operations have been located for some time. Luxembourg has a network of excellent relations with major developed and developing countries around the world. And, in addition to our listing on the New York Stock Exchange, this change in incorporation has the potential to make a listing of our common shares on a European exchange more attractive.
We are proud of our unique global business and this change, which results in our holding and principal operating companies being in Europe, settles our identity as a European company with a substantial and important branch in the thriving Bermuda market.
In response to developments regarding Flagstone Re, Deputy Premier and Minister of Finance Paula Cox said:
While today’s events in the business community are cause for close monitoring, it should be clearly articulated that the changes of a company’s operations has always been a cyclical trend.
Many jurisdictions with similar qualities to Bermuda are vying for existing and new business in these unprecedented times. And each region will experience growth as well as losses. However, in our case we believe that recent successes in the negotiation of Tax Information Exchange Agreements (TIEA) with OECD member countries, and the signing of a Mutual Legal Assistance Treaty with the US will only add to Bermuda’s attraction as a premier jurisdiction for international business.
We are very cognisant of the challenges that lie ahead, and we remain committed to our multi-pronged strategy of economic diplomacy, strengthening strategic alliances and enacting legislative reform to ensure that Bermuda maintains its position among leading business domiciles.
It still remains a fact that global companies continue to view Bermuda as a premier hub of operations. We are a proven, quality jurisdiction, with the assets of speed of execution, effective regulation coupled with a well known reputation for operational efficiency.
Such depth and diversity provides for endurance and stability. And we expect that Bermuda will continue to be an inviting place as a premier domicile of choice.
Additionally, Minister Cox said the Ministry will continue to aggressively market and promote Bermuda as a pinnacle destination in which to conduct business.
Flagstone’s common shares will continue to trade on the New York Stock Exchange (“NYSE”) under the ticker symbol “FSR” and on the Bermuda Stock Exchange. Flagstone will continue to be registered with the SEC and remain subject to SEC reporting requirements, the mandates of the Sarbanes-Oxley Act of 2002, and the corporate governance rules of the NYSE. Finally, the Company will continue to report its consolidated financial results in U.S. dollars using U.S. generally accepted accounting principles.
