Bermuda has "successfully fended off pressure from industrialised countries to review its tax policies and the regulation of its financial services'', according to an annual Financial Times survey.

"We are not prepared to be pushed around, but neither are we foolish enough to engage in a brawl with someone who is bigger and stronger,'' Premier Jennifer Smith is quoted as saying. "Our philosophy, internally and externally, has always been to work with friends rather than battle enemies.

We negotiate and seek solutions that provide the maximum mutual benefits.

"Bermuda will continue to stand apart as the jurisdiction for high quality legitimate business.'' In the survey, the FT looks at the current situation with regard to scrutiny from the Organisation for Economic Cooperation and Development -- OECD - and the Financial Action Task Force -- FATF, both of which have been applying pressure to Bermuda and other offshore finance centres.

The survey said Opposition Leader Pamela Gordon accused the UK of giving in to pressure from the OECD and ignoring Bermuda's interests. She said: "The UK is trying to impose on its territories a higher level of scrutiny than it has asked of itself. Bermuda had to do all the work in resolving the matter.'' But in spite of having come through the scrutiny unscathed, the FT points out there will continue to be a need for vigilance on the taxation and regulation fronts.

Bermuda Monetary Athority chairman Cheryl-Ann Lister told the FT: "These reviews were beneficial to Bermuda as they indicate that we are a sound international financial centre. But the matter is not closed. We constantly have to be vigilant about what is happening. We cannot rest on our laurels.'' Insurance The survey sees the Island's insurance industry as having ridden the soft market well and continuing to experience growth. Robert Steinhoff, chairman of the Insurance Advisory Committee, is quoted as saying: "Bermuda's insurers, with their strong balance sheets, are well positioned to capitalise on the improving rates being currently experienced in the global reinsurance market.'' Max Re is described as "one of the most interesting experiments to be launched recently''. Bob Cooney, the company's chief executive, was critical of the traditional attitude of insurers which spend 80 to 90 percent of their intellectual capital on assessing risks, instead of looking to make more money from their premiums and assets.

Of Max Re's investment strategy he said: "Our principal investment strategy is to obtain an attractive, risk-adjusted return by allocating a significant portion of invested assets to a professionally managed fund of funds incorporating a diversity of alternative investment strategies.'' The survey also examines Bermuda's two giants, ACE and XL. While finding a number of similarities between the two, the FT said the paths really diverged when ACE bought Cigna in 1999, greatly enlarging its international potential and its staff.

But the FT said that in spite of the two companies' strategic differences they both face the same dilemma. "Wherever you are in the market, commercial insurance tends to be cyclical, volatile business. Good and focused underwriting and tight cost control can allow underwriters to buck downturns, but it is impossible to be completely immune from the cycle,'' it said.

FT survey: The Financial Times' annual survey on Bermuda tackles the issue of wealth and rece head on. More coverage: Page 25.

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