was pulling up stakes and leaving Bermuda have been discounted by the firm.

And a decision to register the insurer as a Delaware corporation was purely tax-driven, it has emerged.

It was evident that there would be some corporate changes following the company's buy-out by American International Group (AIG).

AIG is emplacing a new management structure at Starr Excess and its parent SELIC Holdings, Ltd.

Already gone is Clint Greene, senior vice president, marketing. Mr. Greene was hired by the firm and was not previously directly connected to AIG.

Starr Excess was established in May 1993, with AIG owning about 24 percent, and other shareholders that included General Re, owning the remaining 76 percent.

The rumours of a Bermuda departure may have been spawned by public notice that Starr Excess, which has become a wholly-owned subsidiary of AIG since the buy out, is moving its domicile of registration to Delaware.

Tax experts said that the change in Starr's parentage would have US tax implications for the company, as it was registered in Bermuda with branches in London and the US.

It would be a controlled foreign corporation (CFC) with a Bermuda licence owned by the US-registered AIG, and would incur severe tax consequences.

Prior to AIG's buy-out of the company from its founding shareholders, Starr was a non-controlled foreign corporation, which is tax free.

With a low loss experience over the nearly five years, Starr has been making about $30 million annually in net earnings.

The company issues $100-million policies and if it was to have a loss of $100 million under the new structure, it could lose $70 million for the year.

In most businesses, the company would be allowed to take the excess loss and carry it back to previous tax years or forward to future tax years. But as a CFC of AIG, that option would not exist. Experts said that there were other tax disadvantages, as well.

The solution was to move the charter or licence to make Starr a Delaware corporation with a Bermuda branch, instead of a Bermuda company with a US branch.

Asked about the move to Delaware, Starr's senior vice president, underwriting, Mike Bouris, said, "The company's Bermuda operations will remain here. Our efforts and energies will be expended to grow the Bermuda business.

"But there will be big changes, because Starr will now have direct access to business in the US and eventually direct access to business in London. I'm not sure quite how that will be achieved in terms of structures.'' AIG chairman Maurice R. Greenberg said in January when AIG announced the deal to acquire the shares of Starr it did not previously own, stated: "By acquiring full ownership of Starr Excess, AIG will be able to better position the company to participate in the US market, while it continues as a leading excess carrier in the Bermuda market.

"Starr Excess will now have access to the full range of AIG's resources, and we will be able to develop new products and opportunities in the United States.

"We fully intend that Starr Excess will continue as an important participant in the Bermuda market through its office in Bermuda.'' Mr. Bouris pointed out that less excess business in the soft market, has been coming to Bermuda in the last couple of years.

He said, "If you look at excess liability last year, ACE, EXEL and Starr were all down on their business. Everybody's down. The market in Bermuda for high excess business is getting smaller.

"That's why ACE and EXEL are buying Westchester (Specialty Group, Inc.) and Folksamerica (General Insurance Co.) and one of the compelling reasons that Starr had to seek that business that wasn't coming to Bermuda.

"We didn't have a chance to get our wares in front of the buyer. Less of it is being placed here and it is being placed more in the US and especially on occurrence forms.

"Even more critically, London, Lloyd's and continental capacity are picking up huge chunks. By the time an account gets down to Bermuda, it's not like it used to be.

"Many times with a large oil company for example, between Starr, ACE and EXEL we might have placed $400 million worth of risk in Bermuda.

"Now they are looking for Bermuda to write the top $100 million on the programme, for example, $100 million excess of $500 million. The three Bermuda companies are scratching and clawing to see who gets that top $100 million.

There is one winner and two losers.

"So everyone is saying we have to get our products in front of the buyers.''