The fourth largest operator in the Lloyd's market is moving its headquarters from London to Bermuda and also intends to set up a $309 million reinsurance subsidiary on the Island.

Bermuda's attractiveness as the preferred domicile for insurers and reinsurers rather than the UK capital has been bolstered by Kiln's decision to bring its HQ to the Island with the intention of setting up a holding company and subsidiary later this year.

The arrival of the 45-year-old firm marks the latest in an impressive list of London insurers who have jumped across the Atlantic to set up in Bermuda.

Lloyd's mainstays Hiscox, Omega Underwriting and the biggest Lloyd's insurer of all, Catlin Group, have all shifted business interest to Bermuda from London in the past year. Amlin Plc has set up a subsidiary and Brit Insurance Holdings is to be lead investor in a new catastrophe reinsurer Norton Re.

Other London-based insurers are expected to set their compass westward for Hamilton and join the exodus. In January Hardy Underwriting Plc's chief executive officer Barbara Merry spoke of the "enormous competitive advantage" Bermuda offered and hinted the insurer might be next to relocate.

In light of Hardy's upcoming release of financial data next week, Ms Merry declined to comment on the Kiln announcement and her own earlier statement.

Kiln has expanded its global presence and now has offices in South Africa, Singapore, Hong Kong, Belgium as well as London.

Chief executive officer Edward Creasy told the Royal Gazette: "We are looking to use Bermuda to expand our international reach. We think an establishment in Bermuda together with our existing operations will be a major step forward.

"Our next step in our distribution platform will be looking for opportunities in the US."

He said the decision to headquarter in Bermuda with a view to increasing its presence in the North American market was about more than just the Island's geographical proximity to the US. The Island's lighter regulatory regime and availability of alternative sources of capital were other favourable factors have been taken into consideration.

"Bermuda is now very much the centre for insurance in the industry and we want to be able to be close to investors who come to Bermuda and to many of our competitors as well. It really is about the international presence the Island has got at the moment in terms of being very much the centre for investment in this particular industry."

It is Kiln's intention to register its headquarters in Bermuda and capitalise its subsidiary Kiln Re, which was incorporated on the Island on February 21, to the tune of $309 million subject to board of director and shareholder approval.

Kiln's chief financial officer Peter Haynes and group statistician John Yeulepp will work from Bermuda.

Employing 220 staff around the world, Kiln was set up in 1962 and is one of the oldest Lloyd's of London managing agencies. It is the fourth largest operator in the market with around $1.9 billion of premium income capacity under management.

Mr. Creasy said: "We are keeping our existing Lloyd's operations, but moving our headquarters to Bermuda and looking to build our international presence through that."

Kiln's lines of business are 50 percent property insurance, 18 percent property/catastrophe reinsurance and a similar percentage covering marine insurance.

The company this week announced record pre-tax profits for 2006 of $123.7 million, compared to $16.4 million in 2005.

In a statement Mr. Creasy said: "We believe Bermuda offers a favourable environment in which to develop the group as a growing international business and we expect that our new Bermudian operations will be complementary to Kiln's existing Lloyd's business.

"Lloyd's remains, in our view, a commercially advantageous platform which will continue to form an important part of our insurance activities in the future."

Kiln Re will, subject to approval, be a Class 3 Bermuda insurer.

In a company statement outlining why it is making the Bermuda move, Kiln states its independent directors have concluded the company can develop broader international insurance and reinsurance business in Bermuda through its "favourable commercial, legal, regulatory and fiscal environment".

Bermuda also places Kiln within a wider peer group of specialist international underwriters and the Island has become increasingly important for the reinsurance market and is the third largest reinsurance market in the world after the US and Germany with 12 of the world's 40 global reinsurance groups based on the Island.