to Bermuda should be closed to stop the flow of money and jobs out of the United States has been condemned as inflammatory by a leading insurance figure.

The New York Times article with the headline "A Big Tax Loophole for Insurers Prompts a Review on Capitol Hill'' said that there were signs that a number of companies wanted to exploit the "loophole'' And it added that the mood on Capitol Hill, where there is a bill before Congress to close the so-called loophole, was that something should be done quickly to stop the mass-exodus.

But Don Kramer, vice chairman of ACE Ltd., said: "This is an inflammatory article, which has been written to inflame Congress, and it is written so that you, the reader, would also be inflamed.'' Mr. Kramer argued that the article was flawed in its figures which said that companies could go from paying 35 percent tax to one percent tax if they simply relocated to Bermuda.

But he said that this was not only misleading, but wrong. He said that there was a 35 percent maximum tax on a net income, while the one percent was on net income. He said that this would mean that a company that made $100 million would pay the same overall tax whether they were based in Bermuda or not.

The article said: "The loophole, disclosed in March by The New York Times, could cost the Treasury as much as $4 billion a year, equal to about two percent of all corporate tax payments, if every American property and casualty insurer exploited it, according to the latest estimates circulating on Capitol Hill.

"If individual taxpayers have to make up that loss it would cost them each about $32 annually. State governments would also lose money.'' Mr. Kramer pointed out that none of the figures were substantiated by the Treasury or anyone on Capitol Hill. He claimed the article was written to add flames to the fire of Congress to make sure the bill was passed.

The Times went on: "By March, six companies had positioned themselves to move their official headquarters to Bermuda and operate free of federal and state income taxes. Three more deals have been announced and stock market analysts are praising the Bermuda strategy as a boon to shareholders.

"A bipartisan bill to close the loophole was introduced in Congress in April, but languished until last week, when one of the six companies that moved to Bermuda announced it was acquiring a larger insurer. The company, White Mountains Insurance Group, formerly known as Firemen's Fund, is buying the property and casualty insurer CGU, a unit of the CGNU Group of London.'' The article said that last week, the chairman of White Mountains, John J.

Byrne, discussed the possibility of acquiring Safeco, a large insurer in Seattle.

Mr. Byrne later said he had no plans to buy, but after hearing that large companies like Safeco might suddenly try to operate untaxed, the chairman of the House Ways and Means Committee, Bill Archer, Republican of Texas, told his staff to find a way to close the loophole quickly, according to Representative Nancy Johnson, a Connecticut Republican on the committee, the newspaper reported.

The Times added that the chairman of the Senate Finance Committee, William V.

Roth Jr, Republican of Delaware, also has told his staff to find a way to close the loophole, his spokeswoman, Ginny Flynn, said and added representative Johnson said Mr. Archer "understood the urgency of this matter and is really concerned about stopping the flow of jobs and capital out of the country''.

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