The Island has been unfairly attacked over its taxation legislation, according to Brian Duperreault, chairman and chief executive officer of ACE Ltd.

Mr. Duperreault is quoted in the insurance trade magazine National Underwriter as saying that Bermuda is being attacked both on the Bermuda tax issue and by policies adopted by bodies like the OECD who have attacked offshore jurisdictions in general for their tax policies.

The article by Lisa S. Howard reported Mr. Duperreault as saying it is an expensive place to do business.

The article stated that while there are a lot of good reasons to come to Bermuda, it has its downside, Mr. Duperreault noting that it was small and expensive and it hard to bring talent onto the island.

The article covered a speech by Mr. Duperreault given on July 10 at the annual seminar of the New York-based International Insurance Society.

"Some US insurers would like people to believe that there is an unlevel playing field between Bermuda and the United States because of Bermuda's method of taxation, which is based on consumption, not income.'' The article stated that US companies are concerned about the recent spate of re domestications of companies from the United States to Bermuda, which they believe is inspired by tax avoidance.

Mr. Duperreault is quoted as saying: "Prevailing US tax laws prohibit the practice of ceding reinsurance on a less-than-arms-length basis.

"This was certainly not pointed out by the complaining US insurers, (which) failed to mention that fact and that their own US domestic tax benefits bring their effective tax rates below Ireland's ten percent.'' He said that Bermuda now finds itself the subject of criticism on several fronts.

The article quoted Mr. Duperreault as saying: "Unfortunately, without knowledge of the facts, `the protectionist insurers' case sounds credible.'' In addition, Mr. Duperreault said that underwriting insurance and reinsurance came with risk -- and all the tax benefits in the world would not shield companies from losses.

On the recent redomestications to Bermuda, Mr. Duperreault said that global economics and the global insurance arena in particular have benefited greatly from the ability of companies to move and go to jurisdictions that provide a more favourable situation.

"We should all celebrate the fact that today companies can move where they think it is in their best interests to be,'' he is reported as saying. "We shouldn't lose that.'' And he added: "The substance of the current Bermuda insurance market was created by demand and not as a consequence of a favourable tax policy.'' The article said Mr. Duperreault pointed out Bermuda grew as a market as a result of the failure "of other sectors of the insurance industry to serve the needs of their clients''.

He said that Bermuda provided capacity and contributed to the stabilisation of rates during both the liability crisis of the mid-1980s and the catastrophe reinsurance shortage in the 1990s.

He said Bermuda-based ACE itself was created in 1985 by a number of the world's leading industrial companies, which found that excess liability capacity, particularly in the United States, had dried up.

But for all its contributions to free trade and available capacity, it is being attacked, he said.

Another area of attack has come from the Organisation for Economic Cooperation and Development, which, in a recent report on harmful tax competition took a general swipe at offshore jurisdictions. Mr. Duperreault said they had been "complaining that tax exiles, money launderers and cheats were draining (OECD) economies.

"But that's not what Bermuda is all about. Bermuda is a serious financial centre and the Bermuda Government has readily agreed to fully cooperate with OECD requirements.'' Indeed, he said that when OECD officials came to Bermuda, they found a very good situation -- a jurisdiction that had a good track record when dealing with international commerce as well as a very stable, professional centre for financial services.

Mr. Duperreault is reported as saying there are tremendous advantages of being in Bermuda, stating that it was the third-largest property-casualty market in the world after the United States and the United Kingdom and it is a laboratory of innovation.

Brian Dupperault BUSINESS BUC