The attack on Bermuda as an offshore centre for insurance continued unabated yesterday with the New York Times reporting members of the United States Congress as saying "the tax shelter must be shut down''.

Yesterday The Royal Gazette reported that four American insurance giants had gone to Congress in a bid to close a loophole which allows their Bermuda-based competitors to avoid US taxes. That legal loophole has been unused until last year. Now Members of Congress from both parties called for an inquiry into the tax issues relating to Bermuda and said they hoped to get bipartisan agreement on a law to shut down "the Bermuda tax shelter''.

In an article entitled: "Members of Congress Attack Tax Loophole for Insurers'', the New York Times in the business section of yesterday's edition said that the members wanted to look into how American insurance companies could stop paying US income taxes by moving their headquarters to Bermuda.

Sen. Charles Grassley of Iowa, the second ranking Republican on the Senate Finance Committee said: "Any tax policy that provides incentives for companies to move offshore and at the same time creates competitive advantage against American companies needs to be re-examined.'' The article states: "Two Florida Republicans on the House Ways and Means Committee went further saying the tax shelter must be shut down, in part because it will encourage other companies to move offshore or to ask for similar tax breaks.

"Representative Mark Foley of Palm Beach said the Bermuda tax shelter `is startling because it allows companies to completely avoid all income taxes'.'' `Bermuda tax shelter must be shut down' Lloyd Dogger of Texas, who is also on the House Ways and Means Committee, joined in: "It's legal, but it shouldn't be. It's a new type of Bermuda Triangle where revenues disappear, and we need to do something about it.'' The US law makers were reacting to a front page report in the New York Times on Monday where they said that six American insurers had begun exploiting a loophole in US federal tax law by moving their headquarters to Bermuda or by being acquired by a Bermuda insurer, and so `avoid income taxes'.

The article says: "If all American property and casualty insurers similarly moved to Bermuda, they could shelter $40 billion a year based on recent profits, avoiding $7 billion in taxes annually, the Treasury estimates.'' The piece goes on to say that instead of taking advantage of the loophole, America's four biggest insurance companies, Chubb, Hartford, Kemper and Liberty Mutual have ganged together and `are trying to demolish the tax shelter'.

The insurers say that while legal, the arrangement threatens to reduce the government's revenues drastically.

They also say it discriminates against any property and casualty insurer that continues to maintain its headquarters in the US.

Bermuda's two insurance giants, ACE Group of companies and XL Capital, have recently bought American companies, which now do not have to pay income taxes in the States.

In the wake of the article, both ACE and XL have said they abide by international tax laws and they felt Bermuda had been unfairly singled out among offshore centres.

XL told the Gazette the move smacked of "protectionism'' but Government and the industry must take the threat seriously.

TAXES TAX BUSINESS BUC