It would be easy for insurance companies to leave Bermuda if changes in the US tax code were to erode the Island's tax advantages.

That is the view of Hans-Joachim Guenther, Zurich-based chief underwriting officer and head of reinsurance for Europe and Asia at Endurance Specialty Underwriting Ltd., a unit of Bermuda-based Endurance Specialty Holdings Ltd.

Speaking at the International Reinsurance Summit 2009 held in Zurich, Switzerland, earlier this month, Mr. Guenther was quoted in the latest edition of Business Insurance magazine as saying that business would start to move off the Island if the US closed loopholes that have benefited the industry here.

If insurers and reinsurers see little financial advantage to staying in Bermuda, it won't be difficult to leave, Mr. Guenther said, according to the magazine.

"From a theoretical point of view, I believe our industry is simply able to move," he added. And that is likely, he said, if there are no tax advantages to being in Bermuda.

"The tax environment is one of the key drivers for the profitability of our business and it's passed on through our pricing," said Mr. Guenther. If tax advantages of operating in Bermuda change and other jurisdictions provide such breaks, "then I think our business will start to move," he said.

It isn't difficult to relocate insurance market operations because they are not unwieldy like manufacturers that have to move heavy equipment, Mr. Guenther said.

Although Demcratic Congressman Richard Neal has proposed legislation that would raise the effective US tax rate of some Bermuda-based insurance companies with US subsidiaries, the proposed laws would apply to all non-US insurers.

But the Obama administration's pledge to crack down on tax havens may add to the nervousness of some international businesses based on the Island. Bermuda remains on the Organisation for Economic Cooperation and Development's "grey list" where it is described as a "tax haven", but has concluded enough tax information exchange agreements (TIEAs) to be promoted to the "white list", once the agreements are actually signed.

Also on the panel was Mark Byrne, chairman of class of 2005 reinsurer Flagstone Reinsurance Holdings Ltd., which shifted operating headquarters to Switzerland last year, while maintaining its holding company and an underwriting platform on the Island.

"Based on political reasons related to the evolution of US politics, we didn't think that staying as a Bermuda company made sense, and when we considered jurisdictions, Switzerland stood out as probably the best one to be in on the continent," Mr. Byrne was quoted as saying by Business Insurance.

There were other reasons for moving headquarters, Mr. Byrne said. "Clearly, it is more efficient to have our capital consolidated in one place than have it split between two, which was how it worked before. Second, there are many parts of the world where, if you knock on a door and you are from a Swiss company, you're better received than if you are from a small island they haven't heard of."

Bermuda is understood around the world to be a well-regulated jurisdiction for property catastrophe reinsurance, Mr. Byrne said. "But if you are trying to sell aviation reinsurance in India, it's better to have a Swiss business card."

Helmut Söhler, chief executive officer of Arch Reinsurance Europe Underwriting Ltd., said new markets drew Arch to Switzerland three years ago, but "what we do there, we still do from Bermuda".

Bermuda-based Arch set up its Zurich operation as a branch of its Dublin company as a way to attract more middle- and small-market insurer clients in Europe, he said. "For a regional company, the idea of reinsuring with a company somewhere on an island in the Atlantic in a different time zone with people coming from a different culture was strange. So the reason to go (to Zurich) in 2006 was to cover that market."

Endurance also set up its Swiss operation partly for cultural reasons.

"What we decided at Endurance was that we needed to change the business model in order to bring ourselves closer to clients," said Mr. Guenther. That meant Endurance needed to open an office where it could hire locals who know the language and have knowledge of the local market as a way to give the company more "cultural closeness," said Mr. Guenther.