Bermuda-based insurance giant XL Capital Ltd. announced yesterday that it had received English High Court clearance to merge an Irish unit with a London subsidiary.

The portfolio of business of XL Europe (Dublin) will be transferred to XL Insurance Company (London) in a merger that will take effect on December 31. The Irish High Court had already cleared the move last week.

The merger is the culmination of a year-long project to restructure and streamline XL's insurance's operations into a single platform to serve the countries of the European Economic Area as well as Asia and Australia. XL's Lloyd's-based business will be unaffected by the change.

David Duclos, chief executive officer at XL's global insurance operation XL Insurance, said: "The court approval for the merger of XL Insurance Company and XL Europe represents the final step in this long-term project.

"This cross-border merger of insurance companies is the first of its kind in the UK and Ireland, following the recent implementation of the European Union's Merger Directive. It involved close co-ordination between our underwriters, compliance, legal and finance experts while keeping our clients and brokers informed. The project started in 2007 and follows the successful restructuring of XL's reinsurance segment in Europe two years ago.

"We believe that a single, streamlined European and Australasian insurance platform will be better placed to serve our business requirements and the needs of clients and their brokers. We expect the simplified structure to improve capital efficiency and put us in a strong position for Solvency II."

Solvency II is the name given to a new set of European guidelines for insurers operating in the EU to protect policyholders' interests, encompassing risk-based capital requirements and good governance standards.

The merged company will have capital and surplus of just under $1 billion, XL said.