Many Bermuda international insurance companies will likely move their holding companies elsewhere within the next few years, according to a leading industry figure.

Flagstone Reinsurance Holdings Ltd. chairman Mark Byrne said yesterday that he was aware that many companies were looking at redomestication plans — but he added that should not be a serious concern to the Island.

Speaking at the inaugural Bermuda Reinsurance Club event, staged by Reinsurance magazine, Mr. Byrne said: "A lot of Bermuda companies now have holding companies or operating companies in other domiciles, including my own.

"People get nervous about what that means for the future of Bermuda — I think it means almost nothing."

Class of 2005 reinsurer Flagstone merged its Bermuda and Swiss operating units in 2008. Its Bermuda unit then became a branch of the Swiss operation, known as Flagstone Reassurance Suisse. The restructuring allowed Flagstone to consolidate its capital in one operating entity, strengthening its creditworthiness.

But the company kept its holding company on the Island and its operations here were not impacted by the restructuring.

"We pay all the same payroll taxes and create all the same jobs," Mr. Byrne told delegates at the Fairmont Hamilton Princess. "What Bermuda cares about is that there are still brokers getting off airplanes, looking to place submissions. It makes no difference if they are doing business with a Swiss company or a Cayman company."

Mr. Byrne used the example of Ace Ltd., one of the top employers in the Bermuda insurance market, whose holding company was never in Bermuda. Ace redomesticated its holding company from Cayman to Switzerland in 2008. XL Capital Ltd. is planning to follow suit, switching its domicile from Cayman to Ireland later this year.

The Flagstone chairman said it would not surprise him if there were few insurers with holding companies still in Bermuda within a few years. He said he was aware of a "tremendous number" of firms looking at ways to redomesticate holding companies. "But I don't think that matters to Bermuda," he added.

"We are restructuring so we can stay here, not so we can leave."

Fellow panellist Brad Kading, president of the Association of Bermuda Insurers and Reinsurers, said there was a variety of reasons why companies might be looking to restructure. These included US tax policy, the European Union's enhanced insurance regulations, known as Solvency II, and also Bermuda political issues.

"Each of these silos is important, and each affects different companies differently," Mr. Kading said. "There is a convergence right now that is causing concern as to what is the right model."

Solvency II was the biggest concern to more re/insurers than was US tax policy, Mr. Kading said. Insurance regulator the Bermuda Monetary is striving to achieve regulatory equivalence — to be approved by the EU as having regulation standards that match those of Solvency II -to ensure that Bermuda companies doing business in Europe do not operate at a disadvantage.

In the US, the Neal bill proposes changes that would effectively raise the amount of tax paid by non-US insurers with US subsidiaries, who cede premiums to their parents through reinsurance agreements.

"The threats to the Bermuda market have always been there and we will see a changing series of threats," Mr. Kading said. "But there should not be any sense of panic."