Bermuda?s regulatory environment is a key factor in its having developed a robust reinsurance market ? and its keeping that advantage will require vigilence and cooperation with other regulators, delegates at the World Insurance Forum heard yesterday.

?What distinguishes Bermuda is reputation,? said Governor Sir John Vereker, in his opening remarks yesterday morning to a delegation of insurers, reinsurers, brokers, private equity investors and investment bankers attending the biennial forum at the Fairmont Southampton, which finishes today. ?Reputation is hard to build, but easy to lose,? he added.

?Bermuda is a very efficient place to have a holding company if you are an insurance company,? said Stephen Catlin, chief executive and deputy chairman of Catlin Group Limited, a Bermuda-based company that operates primarily out of the Lloyd?s of London market.

Catlin, which was formed on Bermuda in recent years by Mr. Catlin, a veteran of the Lloyd?s market, was followed by Amlin and Hiscox, two of the market?s largest players, setting up Bermuda units late last year.

Lord Levene, chairman of the Lloyd?s market, who was on the Island this week to take part in one of the panel discussions held at the forum yesterday morning, said in a Monday interview that a three-year plan to improve the market?s efficiency was to make it more competitive ?vis ? vis Bermuda, but not just Bermuda?. And he said the Lloyd?s and Bermuda markets complement each other.

Bermuda isn?t only noticed for its regulatory regime in Britain, but has drawn interest on the US side for years from investors wanting to bypass the difficulties of operating in the US, which has a state-by-state regulatory regime of the sector.

?Bermuda is a construct of failed US regulation,? Don Kramer told , of the US?s ?fragmented? approach to regulation. Mr. Kramer is an industry veteran who recently formed $1 billion Bermuda reinsurer Ariel Re.

Jeremy Cox, who is head of the insurance supervisory division at the Bermuda Monetary Authority, said Bermuda takes its regulatory commitments seriously, and is working to bolster its relationship with outside regulators. This could prove a boon for Bermuda?s major insurers and reinsurers who sell policies globally and generally have operations in other jurisdictions.

In total, Mr. Cox has oversight for a sector with some $100 billion in capital that includes both captive insurers and more than 40 large global insurers, many of them quoted on the New York Stock Exchange, Nasdaq or London Stock Exchange.

One of the relationships that Bermuda?s regulators are cultivating, Mr. Cox said, is a more formal understanding with is the UK?s Financial Services Authority. This could ease the multiple regulatory burdens on Bermuda insurers with ties back to London, whether it be through a parent company, or as one of the multiple companies that does business at Lloyd?s.

Bermuda companies are the third-largest investors in the Lloyd?s market, Lord Levene said this week.

David Strachan, sector leader for insurance for the FSA, said mutual recognition may one day be a reality for Bermuda insurers, meaning that there would be an agreement between the Island?s regulators and UK regulators to recognise insurers out of either domicile as being acceptably regulated, and not necessarily subject to additional regulation.

He said there are four pre-conditions the FSA looks for to consider mutual recognition.

There must be a broadly consistent regulatory framework, some convergence in regulatory practices and procedures, a strong line of open communication underpinned by a memorandum of information allowing the exchange of information, and an understanding that a global group should be regulated as a whole, and that would generally fall to the ?home? regulator, or where the company is based.

He said the FSA and the BMA were making progress towards that.

Sir John, in his comments, said Bermuda has to continue to satisfy external scrutiny, which will only intensify as ?financial instruments become more complex, as the volume of transactions increases and as finance ministers become ever more concerned about money laundering, terrorist finance and global financial stability.

?There is absolutely no sign that the international scrutiny, sometimes amounting even to international hostility, of offshore financial centres is going to abate,? Sir John warned.