Bermuda-based ACE Ltd. announced that it will move from its original corporate domicile in the Cayman Islands to Switzerland to protect its reputation, secure a better tax situation and have an improved location to manage its capital.

ACE Chief Executive Officer Evan Greenberg said during a conference call today that, "Cayman brings little to us, yet it exposes us from a reputational, financial and tax perspective and creates unnecessary uncertainty while bringing little."

He did not venture specifics, but firms located in venues such as Bermuda, have been under attack in Congress for using arrangements with offshore jurisdictions to avoid U.S. taxes.

The insurer announced yesterday that its board of directors approved a re-domestication of the company from the Cayman Islands to Zurich.

ACE shareholders, the firm said, will be asked to vote in favor of the proposal in July at the company's annual meeting in Hamilton, Bermuda.

If approved by ACE's shareholders, and subject to certain regulatory approvals, ACE said it expects the re-domestication to be effective in July. In connection with the re-domestication, ACE said it plans to establish a corporate holding company office in Zurich.

Following the re-domestication, the ACE Group of Companies will continue to operate as they do currently. ACE Ltd. will continue to maintain executive offices in Bermuda, and ACE Group Holdings will continue to maintain executive offices in New York.

ACE's Bermuda insurance and reinsurance operations will continue to operate without material changes, will continue to be registered with the U.S. Securities and Exchange Commission, and its common shares will continue to trade on the New York Stock Exchange under the ticker symbol "ACE," the company said.

"This move is part of the natural evolution of ACE from its beginning over two decades ago as a monoline excess insurer owned by its policyholders to a global publicly-traded insurance company operating throughout the developed and developing world," said Mr. Greenberg.

He added that "incorporation in a major financial center, home to many global financial and insurance companies, will provide an improved corporate structure and an excellent location for further growth and expansion of our company."

He said "we believe that this change in our corporate residency will provide us with better strategic flexibility, a solid legal and regulatory environment, and improved ability to manage our capital and our businesses."

In addition, Mr. Greenberg noted that "Switzerland also affords us the security of a network of tax treaties. At the same time, we intend to maintain the ACE Group's operations in Bermuda, where we have conducted business since the inception of the company."

ACE said it does not expect the re-domestication to have any impact on financial results.

Mr. Greenberg noted that the company flies the U.S. flag on operations, and 75 percent of the business is held by an intermediate holding company in New York.

For a big global firm, he said, the "Cayman location is incompatible with ACE as it stands today." Zurich, he added, is a "leading global financial center, with great stability and a political, economic and regulatory tradition of respect for rule of law and a relatively sophisticated financial regulatory framework. It also has reliable tax treaties."

The Zurich installation, he said, will in essence be a strategic holding company with a small staff, with its purpose "overall strategy and governance."

The firm, said Mr. Greenberg, will hold half its board meetings in Zurich and frequent senior level strategy meetings.

New York was ruled out as a new venue for the company's incorporation, he said, because it would mean a "significant tax hit to the shareholders."

Asked if the company foresees turmoil in the Caymans, Mr. Greenberg said, "there is always that potential. There is political, regulatory and reputational risk. It is inappropriate to expose ACE."

As for Bermuda, he said, "some of the same characteristics apply."

He said the move was under study since last March.

Special Reports /

ACE To Incorporate In Zurich, Leave Caymans

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