Property and casualty insurer, Global Indemnity Limited, has revealed that its Board of Directors have finalised the plan to redomesticate the firm and its Bermuda arm, Global Indemnity Reinsurance Company, Ltd., to the U.S.
The board approved that Global Indemnity Group will replace Global Indemnity Limited as the publicly listed parent company of Global Indemnity’s affiliated group. Furthermore, the business of its Bermuda-based reinsurance arm will be assumed by the firm’s existing U.S. insurance company subsidiaries.
The redomestication and related transactions simplify and streamline Global Indemnity’s organizational, statutory and regulatory structure and are expected to result in inter-company efficiencies and long-term administrative cost savings. Four subsidiaries previously part of Global Indemnity’s organisational structure were eliminated, and substantially all foreign subsidiaries were eliminated.
The transactions also reduced the number of nations governing Global Indemnity from 4 to 1 and reduced the number of nations in which Global Indemnity is subject to material taxation from 3 to 1. The U.S. is now Global Indemnity’s only governing, regulating and taxing nation.
In connection with the redomestication, Global Indemnity eliminated approximately $1 billion of inter-company indebtedness, eliminated $174 million (57%) of external indebtedness (reducing the Company’s debt-to-capitalization ratio from 29% to 15%), and provided parent Company with approximately $250 million of cash and investments that may be utilized by the Company for general corporate purposes.
The redomestication was completed without any material transaction-related taxes to Global Indemnity. Further, the expected future expense savings and operating efficiencies are expected to largely offset the anticipated increase in prospective tax liabilities resulting from the transactions.
Apart from incidental transaction related fees and expenses, completion of the redomestication had no impact on the Company’s book value or book value per share, which were $735 million and $51.24, respectively, at June 30, 2020.
The redomestication was approved by shareholders at a special meeting held on August 25, 2020. Shareholders representing 87% of shares outstanding voted at the special meeting, and 92% of shares voted at the special meeting were voted in favour of the redomestication. In addition, 92% of the individual shareholders that were present or represented by proxy and voting at the special meeting voted in favour of the redomestication.
