Lloyds of London insurer Hiscox has revealed that it will be re-domiciling its operations in Bermuda in a move that will allow it to take advantage of the 0% corporate tax-rate on the island.
Hiscox established a Bermuda subsidiary in 2005 and has now decided to move the parent company to the tax haven. The company, which is currently subject to 30% UK corporate taxes, will hope to maintain access to UK businesses while also enjoying the benefits of lower taxes, lighter regulation, and potentially greater access to the US market.
Bermuda, an overseas territory of the UK, is considered to be a global reinsurance center, and is home to many leading insurance companies.
The company revealed its relocation plans as it announced a 30% dip in profits in the first half of 2006 compared with the same period last year. Profit before tax was GBP61.3 million, compared with GBP88.1 million in H1 2005.
Despite the drop in first half profits, the company remained optimistic about the potential for the rest of the year, with chairman Robert Hiscox commenting in a statement: I am writing this as always in the middle of the wind season so do not want to say anything that will look ridiculous in a few weeks time, but even if Mother Nature does choose to subject us to the same onslaught as in 2005, the catastrophe account should do better than last year as we have received much more money for the same risk.
The company also revealed an increase in gross premiums written in the first half to GBP652 million, up from GBP437 million last year.