Insurance Day, a London-based newspaper which covers insurance around the world, noted in an editorial last week that the Island's tax structure and regulations could lead to more and more insurance companies moving to the Island.

Because the editorial encapsulates the advantages of Bermuda and because of the increasing pressure that financial centres like Bermuda feel from "onshore'' economies, we reprint the editorial here: The fiscal attractions of Bermuda as a base for reinsurers have again been underlined by the decision of New Jersey-based reinsurer, Everest Re, to move its holding company offshore and to create a new reinsurance company on the Island.

Everest Re's decision follows a similar relocation last July by PXRE and the recent announcement that the Trenwick Group is in the process of merging its operations with Bermuda's LaSalle Re.

Commenting on the rationale for the move, Everest Re said, in reinsurance terms, Bermuda is now one of the most significant markets in the world. Plus, the group could achieve a much more efficient financial and tax structure by locating its holding company there.

Such statements also add further weight to predictions in the last quarter of 1999 that a wave of redomestications from the US could be on the cards.

Commenting last September, credit rating agency, AM Best, stated that the competitive advantage of Bermuda could trigger a wave of relocations.

Describing the decision by PXRE as a watershed event, the credit ratings agency went on to the predict the strategic change could soon be mirrored by other US-domiciled insurers as margins erode.

Key to AM Best's predictions were two factors, the first being that Bermuda had come of age, gaining respectability as the original non-life start-ups had emerged as market leaders.

The second was that the expansion of Bermudian companies, in terms of products and geographical spread, had created concern among onshore players which were finding it increasingly difficult to compete against the tax-advantaged brethren. The favourable economics of offshore players was also seen to have had a role in denying some onshore players potential acquisitions.

If predictions are correct and a trend is being established, the lesson of Bermuda is one which governments the world over could do well to learn.

While the Island has continued to strive to establish itself as a safe and well-regulated location from which to do business, it has also worked hard to ensure its regulatory environment should enhance, rather than unnecessarily hamper, the position of reinsurers based there.

As in today's world of international trade agreements, high-tech business solutions and global communications, businesses have much greater ability to choose where they locate, governments should note that without the right fiscal environment, today's business could well choose to go elsewhere tomorrow.