NU Online News Service

Reinsurers are increasingly looking to find a home in Europe ascompanies remain concerned about Bermuda's status with regard totax legislation in the United States, according to Standard andPoor's.

Bermuda and Europe continue to vie for the top spot forreinsurance domiciles. Bermuda's tax system, closeness to the U.S.and favorable regulatory system has made it the country of choicesince the late 1990s. However, changes in Bermuda's tax rules couldscare off some companies from settling on the island.

"Changes in the U.S. rules regarding taxation of U.S.-sourcedbusiness going to Bermuda and other low-tax domiciles in the comingyears remain a possibility," said S&P in a report, "Choosing aDomicile Remains a Hot Topic for Global Reinsurers."

"Although the full scope of such potential changes remainsunclear, many market experts expect them to be most relevant forBermuda-domiciled reinsurers with U.S. subsidiaries that quotashare a significant proportion of their gross writings to Bermuda,"S&P added.

Ireland and Switzerland offer reinsurance providers stable taxarrangements and are becoming domiciles of choice, S&P said.Several Bermuda-based reinsurers have set up holding companies orsubsidiaries in Ireland, including PartnerRe, XL Capital, Everest,Arch, Axis, Allied World and Alterra. Others have openedsubsidiaries in Switzerland, such as Flagstone, Catlin and Amlin,S&P said. Luxemburg and the Netherlands are also creatinginterest among reinsurers.

Europe accounted for 60 percent of global net reinsurancepremium written in 2009, and five of the six largestreinsurers--Hannover Re, Lloyd's, Munich Re, SCOR and Swiss Re--arein the region.