An estimated 500 people attended the Bermuda reception in Monte Carlo as reinsurers and brokers met in a social setting to discuss industry issues.

According to Robin Spencer-Arscott, who organised the event with Suzie Pewter, the mood at Wednesday's lunchtime reception in Casino Square was upbeat.

Despite falling reinsurance rates and difficult investment conditions squeezing margins, and concerns over potential imminent changes in the US tax system that could further hit profits, assembled executives found plenty to be cheerful about.

Mr. Spencer-Arscott put it into perspective. "A lot of companies are still doing very well," he said. "The rates are down, because there have not been big losses. So it's not a case of people losing money — they're just not making quite as much as they were." Major topics of conversation between sips of champagne were Aon's ongoing acquisition of reinsurance broker Benfield and the storms raging in the Caribbean and the Gulf of Mexico. While big insured losses would hurt some reinsurers initially, a catastrophe would help to halt the slide in reinsurance rates seen in the past year.

London-based reinsurance magazine Reactions yesterday published a story suggesting that Bermudian reinsurers who conduct a lot of business in the US were considering switching their domiciles to Europe, because of fears over possible imminent US taxation changes.

US subsidiaries of Bermuda reinsurers have enjoyed a tax advantage over US-based rivals, as they have been able to cede a proportion of the risk they take on to their Bermuda parents.

At a press conference in Monaco, John Andre, vice-president and analyst at AM Best, said: "A lot of Bermuda companies have established US subsidiaries and they might have to recognise that business as US income and pay US tax," he said.

"Costs in Bermuda have been going up and the cost to put senior executives on the island is a chunky number."

The magazine quoted two Bermuda reinsurance bosses who were keen to play down those fears.

"We have made a big commitment and we have done a lot of business in Bermuda so we are happy with our choice," said Kenneth LeStrange, chief executive of Endurance. "We are monitoring the tax situation very closely but we have no plans to move our domicile."

Ed Noonan, chief executive of fellow Bermudian reinsurer Validus, said: "No doubt there will be other companies exploring this but I don't see a compelling case to redomicile to Europe. I don't think a federal excise tax would make people leave Bermuda. It wouldn't be terribly detrimental to Bermuda. There would be an additional cost but only around the margins." Mr. Spencer-Arscott said it was normal for the tax issue to gain prominence during a US election campaign, just as it had when John Kerry ran for president four years ago, and that this was "all part of the political platform".

"What the reinsurers will say is that if US insurance companies want the coverage that Bermuda reinsurers can provide, then they should leave those companies alone," Mr. Spencer-Arscott said.

"If the rules change and we can't provide the same level of coverage, then it will be the policyholders who suffer."

This week's reception was the 28th Bermuda party at Les Rendez-Vous de Septembre.