XL Capital president Brian O'Hara caused much head-scratching yesterday with his stance on the Bermuda tax loophole.

His comments came in a panel discussion at the 14th International Reinsurance Congress at the Fairmont Southampton Princess Hotel.

Asked for his views on the controversial issue, he said he would help efforts that would prevent US companies from physically moving to Bermuda.

The bill currently before the US congress was initiated by American insurers Chubb/Hartford who claim that there is a loophole in the US tax system which allows Bermuda-based insurance companies doing business in the US to avoid paying income tax.

A recent article in the New York Times claimed that the loss per year to the US Treasury through the alleged loophole was in the region of $4 billion.

"I am not that worried (about the debate) other than it is bothersome to have people throw stones at you,'' Mr. O'Hara said.

"One of them even said we were doing illegal things. We thought about suing them because what we are doing is legal and transparent and above board,'' he added.

"It is a bit of storm in a tea cup. With regard to XL Capital we have almost no interplay with our competitors so we are not taking any bread out of their mouths anyway.'' Mr. O'Hara explained that in his opinion the real issue in dispute was the relocation of companies from the US to Bermuda.

"In that regard I don't think we're part of that argument at all,'' he said.

"We started here. We grew here. We have 250 people here. We have a big building here that we are about to move into.

" It wouldn't bother me in the least if they (the US Congress) came up with a law which didn't permit or where they made it so onerous for companies to repatriate,'' he said.

"We don't have any room down here anyway. I don't know where they'd go.

They'd be driving us out. If you look around you can't find a house,'' he added.

"Actually we would welcome that, we probably would give aid to our lobbyists who are registered.'' And Mr. O'Hara labelled the behaviour as "crazy''.

"It is very complex indeed,'' he said, "In fact to just go after one country like Bermuda and in this international trade environment is just...crazy.

"All companies reinsure from the various territories back to their home office. That is how business is being done.

"If we are fortunate enough to build our company in a territory that doesn't have income tax, there are other down sides, '' he said.

"There are tradeoffs. I think the whole thing is way over blown. We are now an international company so that whatever they try to do it will probably have very little effect.''