Magazine row at the annual Risk and Insurance Management Society, Inc (RIMS) conference emphasised just how important the Island has become in the insurance world. There were about 20 speciality publications available free of charge to delegates along the row of a wall near the exhibit hall at the Dallas Convention Centre.

Best's Review cover in the current April issue features a group shot of ACE Ltd. chairman, president, and chief executive officer Brian Duperreault, XL president and chief executive Brian O'Hara, PartnerRe Ltd. president and chief executive Herbert Haag and Mutual Risk Management chairman and chief executive officer Robert Mulderig. The magazine is a publication of ratings agency A.M.

Best Co.

The magazine's feature story "The new Angle on Bermuda'' focuses on the local industry's emergence as innovative global players transforming the industry as a whole. "To understand the phenomenon of the Bermuda insurance market, it might help to think of some hotbeds of growth and innovation in other industries -- such as what California's Silicon Valley has become to the high-technology business,'' reporter Brendan Noonan writes in the article.

"Then add a dash of Wall Street.'' The article then goes on the discuss how the insurers have moved on to a new phase, transcending the Island's negligible taxes and regulatory regime which served to foster the market's growth.

The magazine emphasises that the tax advantage still remains as a key benefit to the industry. Bermuda companies pay little or no taxes while a US insurer is subject to 35 percent corporate income tax, plus any state taxes.

However even companies that get little benefit from the tax structure, such as Mutual Risk, choose to stay because of the advantages of location. Mutual Risk pays lots of taxes on its extensive US-based operations dealing captive management business.

ACE and XL's significant presences in the US means those companies are also paying taxes on those operations. Mr. Duperreault said the Island remained a company's headquarters due to the human resources available and the favourable regulatory regime. To emphasise the tax and regulatory advantage the magazine compares the costs of setting up a generic insurance or captive company in Bermuda as compared to New York. (See chart on Page 17).

"Bermuda's regulatory system is now the Island's greatest structural advantage from many insurers,'' A.M. Best stated. "Its approach to rates and forms is strictly hands off, reflecting the kind of business international insurers write from the Island: Bermuda seen as key insurance player "Policies for highly sophisticated buyers of primary insurance and reinsurance who don't need the consumer protections US regulators provide to personal lines and small-business customers.'' However A.M. Best noted that other US states were now attempting to re-jig their regulations to emulate Bermuda's success in attracting companies looking to escape the red tape.

Another magazine along the free display row covering Bermuda was Business Insurance. The magazine's annual captive insurance report ranked Bermuda number one in the world among domiciles for this special type of insurance company. A captive insures mainly the risks of the parent company that owns it.

Bermuda had 1,054 captives at the end of 1998, more than double the number in the Cayman Islands, which holds the number two spot with 485 captives. The Bermuda figure is four up on the 1997 figures.

"Those stable numbers belie a year of considerable activity in Bermuda though,'' the magazine stated. "A total of almost 100 international companies were formed in Bermuda in 1998, and Business Insurance estimates that two-thirds of those were captives. At the same time, Bermuda saw 90 companies cease business in 1998, with BI again estimating that two-thirds of those were captives.

An article focusing solely on Bermuda noted the continuing trend in the formation of health-care captives on the Island. The magazine also noted that due to the soft commercial rates for insurance some companies had chosen to go to the traditional market, leaving their captives dormant.

One such company was Domino's Pizza Inc. which established North American Assurance & Indemnity Co. Ltd. on the Island in 1988. The captive, which is managed by J&H Marsh & McLennan Management (Bermuda) Ltd. has not been used since December 1998 due to the availability of cheap rates in the US.

Domino's Pizza director of risk management is quoted as stating the captive is "ready and raring to go again when the hard market return''.

Even with the cheap rates available through traditional insurers companies like US Airways Group Inc. still found it competitive to set up captives. US Airways set up Airways Assurance Ltd. in Bermuda last year. The company initially used Sedgwick, but switched to Aon Corp. The captive is still managed by the former Sedgwick Staff now at J&H Marsh & McLennan.

US Airways director of risk management James Harrington said he chose Bermuda for several reasons.

"As a major carrier to Bermuda it is easy for risk management personnel to travel there,'' he said. The Island has a well-established captive insurance infrastructure, and it is a major insurance market so Mr. Harrington can visit commercial insurance carriers there when he travels on captive business.

Captive managers on the Island were quoted as stating that they expect an increase in integrated insurance programmes in the coming years that will likely include coverage of risks that are not normally covered by insurance, such as currency risk.

The top manager of Bermuda captives in 1998 by gross premium volume was J&H Marsh, with 313 captives and $2.77 billion in premium. Aon Insurance Mangers (Bermuda) Ltd. was second on the list with 194 captives and gross premium volume of $1.64 billion. Mutual Risk Captive Group Ltd. (which includes International Advisory Services Ltd.) was third with 159 captives and premium of $1.4 billion.

Other magazines also had features in which Bermuda and Bermuda companies were featured. These included Reactions, Global Reinsurance, The Review, and the Financial Times World Insurance Report.

The Financial Times had an analysis issue solely devoted to Bermuda with the title "Insurance Laboratory'' an indication that the catch logo emblazoned on the Bermuda bag being handed out at the RIMS conference is catching on.

And there at the end of magazine row was The Royal Gazette's own Bottom Line Magazine, with a cartoon picture of ACE Ltd. and XL Capital Ltd.'s chief executives on the front promoting a feature article on the two companies.

COST COMPARISON The comparative costs in Bermuda and New York for setting up a captive or insurance company: Bermuda Minimum paid in Capital $120,000 to $1 million minimum capital and surplus $120,000 to $100 million Deposit requirements None Taxes and fees No corporate income taxes, but duties paid on imported goods and services $1,695 to $26,000 annual fee for exempted companies, $800 to $15,000 business fee, depending on type of insurer Rate filing None **** New York Minimum paid in Capital $1 million minimum capital and surplus $17.15 to $35 million Deposit requirements $400,000 to $3 million Taxes and fees Federal corporate income tax of 35 percent, state corporation and franchise (premium) taxes, special rates for captives Rate filing Rates must be filed with the insurance department for approval, subject to detailed requirements based on lines of business Form filing Similar to rate filing requirements CHART provided by A.M. Best