Under attack from outside, Bermuda's best chance of keeping ahead as a premier offshore financial centre is to get serious about educating its young people to a standard that makes them capable of filling vacancies within the Island's $72 billion insurance and reinsurance industry. But that can not be achieved through Government demands that locals be employed within the city office blocks. Rather, to ensure that Bermuda remains a competitive jurisdiction it needs to bring its young people up to a standard of education that means they can secure careers on merit within the Island's "centre of excellence for international insurance and reinsurance."

Those views were expressed by one of Bermuda's most well-known and respected company bosses Don Kramer, who currently heads Ariel Re - the fifth company he has set up in Bermuda since the 1970s.

Re-affirming that Bermuda's insurance sector is vibrant and healthy, he said it also needed to nurture and promote local talent, but added:"This can't be achieved by demands for local employment without requisite education. Because employing less than the best will only lead to creating inferior companies in a highly competitive world. Every other jurisdiction, for example the Dubai Financial Centre, will pick us off if we are less than the best.

"We need to do more, and I think I speak for the entire industry when I say we are anxious and we are willing to increase the employment of young qualified Bermudians, we are willing to support internship and scholarship programmes but we need Bermuda to turn out qualified high school and college graduates. We need to support primary school excellence and we need to improve the Island's public education system."

Mr. Kramer was guest speaker at the annual Christmas dinner for the Bermuda Insurance Institute and took his cue from an article that appeared a few days earlier in London's Financial Times newspaper and reflected on challenges to the Island's success.

The UK newspaper questioned the sustainability of Bermuda's insurance industry and included mention of the threat also from the group of US insurers, led by William Berkely, that is lobbying Washington politicians to get them to look at tax breaks that are available to insurers that write business in the US but are based in tax-friendly locations.

Mr. Kramer, summerising the article, said it concluded Bermuda might take a body blow (if US legislation is changed) and that with insurance premiums falling, some of the capital that washed up in Bermuda in 2005 is leaving.

"They are questioning our sustainability, but on the very same day (December 7) the Organisation for Economic Cooperation and Development made the following release. 'OECD applauds new tax information exchange pact between Bermuda and the UK,' suggesting that the new cooperation package represents another step forward in its long-standing bid to win greater transparency from offshore financial centres.

"The OECD welcomed the UK's new pact with Bermuda which marks the first time that British tax authorities have reached agreement with an independent offshore financial centre and the first stage of information exchange of criminal and civil purposes,"said Mr. Kramer.

"So, are we the demon or are we the good guys? And is Bermuda under attack, is it threatened by the abandonment by the reinsurance field?"

The Ariel Re boss asked if it was so that the US and UK are promoting legislation to make Bermuda less attractive a place to do business?And is the Bermuda Government supporting the industry or making demands that could discourage growth?

"Is immigration requiring ex-pat expertise to be replaced by Bermudians? Is increasing outsourcing the way ahead for Bermuda?" he said.

Mr. Kramer started his first company in Bermuda in 1974 and returned to the Island to make other deals in the late 1970s and early 1980s, setting up his fourth company in 1993 and staying ever since. Ariel Re, his fifth venture, was a 2005 start-up.

"I have been deeply involved in this community for 14 years. This industry's growth has been breath-taking, the accumulation of talent and expertise that has been centred on Bermuda is amazing. Bermuda has become a world-recognised leader in insurance," he said.

He then turned to the article and its mention of the ongoing lobbying of a powerful group of US insurers, led by Mr. Berkely, which is seeking changes to the tax arrangements for companies that cede US business offshore.

Earlier this year it was Mr. Kramer who delivered the Bermuda response to US senators on behalf of the Association of Bermuda Insurers and Reinsurers.

That response included facts about the economic impact of Bermuda-based insurers and reinsurers on the US, and that they had added $92.5 billion to the US gross domestic product between 2002-2005. Bermuda firms accounted for $28.1 billion in 2005.

"Why then is there an attack on from the US insurers - what is the gripe?" he asked.

"In a letter to the US Congress they (the US insurance lobby group) say the problem arises because certain foreign-controlled companies can strip much of their underwriting and investment income from writing US business, out of the United States by reinsuring business with a related party located in a low- or no-tax location. That is their complaint.

"The present system of taxation and transfer pricing makes sure that what happens is very effective. They talked about earnings' stripping but they did not talk about the fact that when you cede reinsurance you cede risk."

According to Mr. Kramer the current UStax system is "perfectly adequate" and Bermuda delivers a sound and valuable product to the United States.

He concluded: "So the Bermuda industry is alive and vibrant and it is a major positive contributor to both Bermuda and its economy and the US and its economy.

"And recognising the very importance of this industry to the economy the Government of Bermuda and the international companies are focused on increasing the skill levels of Bermudians.

"The Government and the education system can secure Bermuda's future as a centre of excellence for the international insurance and reinsurance industry for generations to come.

"We can do it - the talent is here. We need to bring in younger people. We need to fill in the primary education system. We in the insurance industry are dedicated to it."