Beazley Group - Caught in an Irish Stew?

I do not pretend to have any understanding of economics. I am at a particular loss to understand how so many Western countries have completely mismanaged their finances. It seems as if we've all had boys pretending to be chancellors rather than men actually doing the job properly.

Yesterday's news from Ireland is being reported as a devastating blow to that country's much vaunted reputation for economic dynamism. It sounds as if it has been no more than the froth on top of a badly drawn pint of Guinness. Now the froth has subsided and the glass is revealed as being only half full.

Definitely NOT a work of Genius.

So from my narrow, parochial, selfish point of view, is there anything specific I need to think about? Any action I need to take? Any points I need to take on board?

The most obvious thing for me personally concerns Beazley Group (LON:BEZ) , the specialist Insurance company. I have a long standing interest in Beazley. I have dipped in and out of their shares a few times. I think their business model is very sound, the management team is outstanding, the CEO is extraordinarily good - sharp as a razor, completely straight, very open, hugely energetic. I like their self confidence combined with conservative risk management. I like the drive which has been displayed most recently in their hostile bid for another insurer. In short I hold the company in high esteem. I have been watching and waiting for the right time to re-enter. Next time I buy I envisage taking an ultra long term view of the shares and dropping them into a drawer which I don't re-open for years. (the last couple of times I have sold at a very healthy profit after a very short time for reasons entirely unrelated to my long term expectations of BEZ).

BUT.....You did know there was a but coming, didn't you?

Last year BEZ did some fancy footwork and relocated its business to Dublin for tax purposes. The immediate effect was a reduction in the headline rate of tax from about 28% to about 18%. (I've just tried and failed to validate those numbers so I'm quoting from memory here. Don't rely on my numbers being precise.) That meant that profit after tax rose from 72% of gross profit to 82% - an increase of almost 14%. At the time this was announced BEZ said:

 "The Republic of Ireland enjoys a stable and respected legal, regulatory and tax environment. The changes to our corporate structure should enhance the group's return on capital and competitive position."

You can see what's bothering me, can't you? Is the implosion of the Irish economy going to lead to a substantial change in its tax regime where companies like Beazley are concerned? If Ireland simply upped its tax rates to be on a par with the UK there would be a significant effect on Bez's after tax profits. Maybe they could relocate again to yet another tax haven? But, the truth is that the Irishness of Beazley is a piece of creative blarney. Management remains physically based in London. Board meetings are held in Dublin so directors have to hop across the water for the occasional day trip in order to satisfy the regulators. It's the proximity of Dublin that allows the scheme to work. Belize or Panama might offer similar fiscal advantages but they aren't really doable as a quick afternoon jaunt and home again in time for supper, unless and until RyanAir lays on special flights. Not much of an incentive that idea is it?

I still like Beazley Group (LON:BEZ) an awful lot but until the smoke clears from O'Connell Street or wherever the Irish Treasury is, I'll just keep waiting.