Chief Executive Officer Barbara Merry said the company will finally decide by the time it announces its first-half earnings in September. "The competitive advantage is enormous," said Merry. "I'm slightly concerned we aren't going to have much choice."

Omega, which set up a new Bermudian company, Omega Insurance Holdings, in October, said it was being created because the vast majority of its premiums are generated in the nearby United States.

"These proposals are designed to give Omega the best operating structure with which to develop the Group across three strong underwriting businesses in our key markets of Lloyd's, Bermuda and the US," commented Walter Fiederowicz, Chairman of Omega.

The move once again highlighted the advantages of Bermuda's 0% corporate tax regime versus the 30% paid by firms in London.

Robert Hiscox, chairman of London-listed reinsurer Hiscox Plc, which completed its move to Bermuda late last year, stated that tax and over-regulation in the UK was behind the decision to transfer much of the firm's operations.

It has also been reported that many other Lloyds firms are considering similar moves, and Lloyds chairman Lord Levene is using his position on an influential advisory committee established by Chancellor of the Exchequer Gordon Brown to convince the UK government to rethink its tax policies.

While London is unlikely to be able to compete with Bermuda on tax, some analysts nonetheless believe that Lloyds has a number of major advantages over its offshore competitor, and that reports of an impending exodus from Lloyds may be premature.

In comments made to the Independent newspaper, Greg Carter, an analyst at Fitch Ratings observed of Lloyds that: "I would expect it to emphasise the advantages that it does have - such as licensing in 90 to 100 countries and the fact that underwriters can take the [A grade] financial rating of the market as a whole. If a company set up on its own, it would never achieve such a strong rating so quickly."

Despite the defections, Lloyd's said this week that it expects to increase its capacity this year by 9% to $31.7 billion. Hardy's own underwriting capacity this year will be GBP175m, said Ms Merry.