A leading insurance industry publication has published an article in which ACE's chairman and chief executive officer is quoted as saying that the US Treasury should send his company a thank-you note instead of tabling legislation in Congress which could adversely affect Bermuda.

The article in, Best's Insurance News, of May 09, 2000, has Brian Duperreault talking on the `Bermuda Tax' issue and is headlined `Bermuda Insurance Executives Criticise US Tax Legislation'.

Mr. Duperreault also said in the article that the controversial legislation in the US Congress which is aimed at closing down a so-called `tax loophole' that allows Bermuda insurers not to pay income tax isn't likely to pass this year.

According to Mr. Duperreault, when Ace acquired the property/casualty operations of Cigna Corp. last July, the units came with a `huge tax loss' that Ace had since turned into a profit, making those operations a U.S.

taxpayer for the first time in years.

Mr. Duperreault is quoted during a talk at Eqecat's `Innovations in Catastrophe Management on May 8, a one-day conference in Hamilton, Bermuda as saying: "The US Treasury should send us a thank-you note.'' US Congress members Nancy Johnson, (R-Connecticut), and Richard Neal, (D-Massachusetts), have introduced legislation in Congress after lobbying by four American insurance giants, including Chubb Corp. and Hartford Financial Services Group Inc., to tax Bermuda companies on their US operations and discourage other US insurers from redomesticating to Bermuda.

Mr. Duperreault said: "There is a prediction from Chubb that soon you will be able to drive from the East Coast of the United States to Bermuda.

"Chubb would have you believe that the entire US insurance industry is moving to Bermuda. This would create a Catch-22, because Bermuda is very small and would have to be increased in size to accommodate the 1.3 million people who work in the US insurance industry. Then, of course, if Bermuda were attached to the US, all the escapees would become taxable.'' He continued: "It amazes me how gullible some people are. How can anyone be persuaded that the loss of an industry which paid an aggregate of $5.2 billion in taxes last year will cost the United States $7 billion in lost taxes next year?'' Chubb's global tax rate, Duperreault said, is 12.5 percent, "which is 3.5 percent lower than Ace's effective tax rate on its property/casualty operations. Hartford pays just 9 percent.'' Duperreault said in the article that the driver of Bermuda's success was the mid-1980s "failure of US carriers like Chubb and Hartford to meet the needs of their clients''.

The real keys to the success of Bermuda's insurers and reinsurers were truly disciplined focus and strong underwriting practices, he said.

In the article, Duperreault is said to be also predicting the end of the soft market, saying that at Risk and Insurance Management Society's conference in San Francisco last week, major corporate buyers were steeling themselves for significant rate increases and further industry consolidation.

In a question-and-answer session after Duperreault's comments, William Riker, president and chief operating officer of Renaissance Re, described the Neal/Johnson legislation as an "irrelevant, direct attack on Bermuda, extra territorial, a tax-gathering exercise, ill-conceived and anti-free trade.''