FORMER Premier Sir John Swan has refuted rumours that President George H.W. Bush, who visited Bermuda in April this year, warned him that the island's prospects as an off-shore business centre were under threat.

But Sir John did say that there was no doubt that Bermuda faced challenges that neither the former nor the current President Bush "have any effective control of things that could happen to us".

Since the former President's visit, unsubstantiated and alarmist reports have circulated around the island ? and on the Internet ? to the effect Bush told his old friend Sir John that the current US backlash against off-shore business domiciles would almost certainly put Bermuda out of business within the next few years. "President (George H.W.) Bush has a high regard for Bermuda and its people; he was here when he was President, and was very complimentary about how beautiful the island looked," said Sir John. "Of course, he came down to play golf, and very much enjoyed it.

"Obviously, there were things we discussed from the point of view of policy which I can't get into, but we did share some opinions, but that's of a confidential nature. Now there are other things at play that will affect Bermuda.

"There's been something of a 'regime change' in terms of attitude in the US; with the competition from emerging nations, the US and the individual states are not able to meet their budgetary requirements, and are looking to see what they can do to improve business.

"Just this week, we saw the President's son, Florida Governor Jeb Bush, sign legislation to encourage overseas companies to transact insurance and reinsurance business in the state; in other words, he is, in effect, creating a jurisdiction that will favour insurance.

"And then there are the controversies we're having here. Instead of some business coming offshore, it will be encouraged to stay in the US. In fact, New York is looking at ways to increase its attractiveness as a jurisdiction." However, Sir John insisted that President Bush had not "picked out" Bermuda in their various discussions.

"He didn't come here to give us any sort of adverse message at all," Sir John said.

"We have the goodwill of the President's father, but you have events taking place with federal and state regulatory conditions that could adversely affect us, and neither the father or the son have any effective control of things that could happen to us.

"As we have seen with (New York State Attorney General) Eliot Spitzer, individual states can take actions that can affect us, and there's the possibility of 49 other Eliot Spitzers, and every state has its own insurance commissioner.

"The insurance business is not regulated federally like the banking industry, and each state can take the action it thinks is appropriate to its own circumstances. It is Spitzer's view, more widely shared in the US, that Congress should enact legislation to regulate insurance federally, although we can't be sure what that would mean for us in the final analysis.

"But once you have that type of federal regulation, there will be more of a national focus on what's happening in insurance."

Sir John gave an assurance that he heard nothing from President Bush which he thought he needed to share with the Government.

"There was nothing specific in our discussions about Bermuda on a political basis, but it's clear that we are facing some changing circumstances."