PartnerRe is the latest reinsurer to be seduced by Dublin
The announcement that PartnerRe will consolidate its European operations in Dublin on 1 January 2008 should come as no surprise. It follows a similar decision made last year by XL.
When the EU Reinsurance Directive comes into effect at the end of 2007, Partner Reinsurance Europe and XL Re Europe will gain access to all EU member states via "passporting".
By virtue of consolidation, PartnerRe will also gain from centralising its capital base, explained Bruno Meyenhofer, CEO of PartnerRe Global. There is also the favourable rate of tax - 12.5% in Ireland - compared to 40% in Germany and 28% in the UK and Sweden. "Tax is one consideration and it's a serious one," explained Meyenhofer. "It's serious because it's part of the cost of the product and you have to think about your clients and shareholders"
So is Dublin set to become the next big reinsurance centre? Or could it be Luxembourg? The tiny EU state has got Swiss Re's vote. It intends to form three new entities there to gain from "the simplification of its legal structure".
Introducing Europe-wide regulation should provide a level playing field. It also entails opening up the market to new competitive forces. "In a single market, governments have to consider the fact that raising tax is not a good decision when competing with other jurisdictions," said Meyenhofer.