Bermudian Media Hits Back Following Reincorporation Row

by Mike Godfrey, Tax-News.com, New York

06 March 2002

The Bermudian media has hit back following the furore which has erupted as the result of a wave of formerly US-based insurance companies choosing to reincorporate in Bermuda, in order to take advantage of a more favourable tax and regulatory regime.

Writing in Monday's Royal Gazette, insurance expert and columnist Cathy Duffy condemned the New York Times report which sparked the outcry as 'patriotism yellow journalism', and argued that the newspaper and the politicians which have called for an investigation into the wave of offshore relocations: 'have obviously chosen to ignore the fact that without the favourable regulatory environment in Bermuda, the global insurance industry would be worse off than it currently is'.

Echoing the sentiments of Finance Minister Eugene Cox, who has also recently spoken out in the jurisdiction's defense, the Royal Gazette report explained that: 'Favourable regulation does not mean zero regulation,' and questioned how, with the supposedly strict regulatory environment for businesses in the United States, an unmitigated disaster such as the Enron collapse could have been permitted to occur.

Following the US Treasury Department's announcement that it would be launching an investigation into the reasons why companies are choosing to relocate, and the tax and other consequences of offshore reincorporation, Ms Duffy suggested that the outcry may in fact have positive consequences for Bermuda, arguing that: 'this coverage has put us front and centre stage to gain access to the US Government, and let it know just how much we have contributed to balancing the insurance shortfall by providing a stable and regulated environment for the new capital.'

The report concluded by observing that the world has become a 'global village', whether the New York Times, outraged politicians and domestic insurers want to accept it or not, and that companies should be allowed to operate accordingly.

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