Brit to Move Domicile to Netherlands, Posts 53% Profit Dip

LONDON, Mar 10, 2009 (A. M. Best via COMTEX) -- BTIHF | Quote | Chart | News | PowerRating -- Attracted by the prospect of lower taxes, U.K.-based nonlife insurer and reinsurer Brit Insurance Holdings plc announced its intention to move its headquarters from London to the Netherlands.

A move by Brit to the Netherlands in 2009 could allow the group to cut its taxes by about half over the coming years, said Chief Executive Dane Douetil at a press conference.

The announcement came as Brit posted a 53% fall in 2008 pretax profit to 89.2 million pounds (97.5 million euros) from 191.2 million pounds in 2007. Comprehensive income after taxes was 65.4 million pounds, down 53.6% from the previous year.

It was ?a good year for Brit in what was obviously a difficult market,? said Douetil.

The move to the Netherlands remains ?subject to a whole number of clearances,? Douetil said. A specific location within the Netherlands has not yet been chosen, he said.

?The Netherlands, we see as a great location for international growth,? Douetil said. ?Obviously the Netherlands have a great history in international trade.?

Douetil pointed to the country?s ?stable fiscal policy,? its favorable tax climate and its attractive regulatory structure. ?Most importantly, they are within the [European Union],? Douetil said.

The move will also allow Brit to compete more effectively in the international market, said Douetil, who expects things to be in place by the summer of 2009.

Douetil noted that Brit had looked at other locations. If this choice does not work out, he said, there would be other possibilities.

?The Netherlands has got good transport links,? Douetil told the press conference. ?It is an easy place to get in and out of.?

In answer to a question, Douetil said he was not overly worried about a possible negative political backlash in the United Kingdom.

?I think there is a concern,? he said. ?Certainly we don?t want to make a big thing of it. I think it?s a real shame that we have not been able to find a platform to compete on a global stage.?

He said the decision was neither ?pro- nor anti-the U.K.,? where it remains happy with the regulatory regime.

The U.K. government has been in the position to assist U.K. businesses, Douetil said. ?They haven?t done so,? he said. ?And, more particularly, they haven?t created a stability of long-term planning.?

The move of Brit?s domicile out of the United Kingdom was signaled in 2008 when Douetil told a press conference to announce the group?s interim results that Brit was looking at ?a number of jurisdictions, including Europe? (BestWire, Aug. 28, 2008).

Douetil complained at the time of uncertainty from the U.K. government on taxation, especially in relation to overseas profits.

Brit?s 2008 earnings per share fell to 21.5 pence from 43.2 pence. Gross written premiums rose to 1.39 billion pounds from 1.26 billion pounds. The combined ratio was 99.4, compared to 92.7 in 2007.

Investment produced a return of 0.16% in ?difficult markets,? Brit said. Return on equity fell to 9.2% from 22.1%. Brit expects to pay a full-year dividend of 15 pence.

Looking into 2009, Brit (LSE: BRE) predicted that the international insurance market will be affected by ?capacity concerns.? This squeeze is likely to push up rates, Brit added.

?Insurance capital has been eroded by the combined elements of significant catastrophe related claims during 2008 and by the varied and significant effects of economic turbulence,? Brit said in a statement.

Brit sees ?good prospects? across all its business this year, Douetil told the press conference. ?That wasn?t what we would have expected six months ago.?

Brit Insurance Ltd. currently has a Best?s Financial Strength Rating A (Excellent).

(By Robert O'Connor, London editor: Robert.OConnor@ambest.com)

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