International news reports in recent days have cited Bermuda - with its ability to attract the bulk of new reinsurance business following September 11- as possibly having an adverse affect on the hardening market.

Reuters reports have said estimates on the extent to which the market will see rate increases - or hardening - and how sustained the hardening will be, may diminish with the flow of capital and new business.

Bermuda has attracted nine new reinsurers since the September 11 attacks, as a result of a shortfall in capacity.

In response to the reports, the Bermuda Government has affirmed Bermuda's status as an insurance centre but stressed that quality of the companies, rather than growing the number of companies, is the Island's focus.

A Ministry of Finance spokesperson said: "Bermuda's record as an innovative, speciality market is one which demonstrates an ability to meet insurers' needs whenever the regular or traditional markets cannot or will not respond. The property catastrophe insurers formed in the early 90s attracted management and underwriting talent of the highest international order. This resource of intellectual capital has resulted in the Bermuda 'cats' having the financial stability to withstand the tragedy of September 11 and to commit to paying claims on a timely basis.

"Bermuda is not just seeking growth in the number of companies on our register; the emphasis remains on attracting quality players. This strategy of ensuring quality first has been successful. Most of the "Fortune 100" companies have a presence in Bermuda."

Citing some of Bermuda's advantages, the Ministry pointed to: "The substantial resource of intellectual and financial capital on the Island; the success of Bermuda's property catastrophe insurers in effectively managing their risk through an extended soft market, and last, but not least, quality control."

Recent Reuters reports said industry insiders attribute lower-than-expected rate increases to the influx of new companies "several of which are based on the Atlantic tax haven island of Bermuda, which have reduced the size of price rises that their hard-pressed rivals, struggling under the burden of massive losses from the World Trade Center attacks, have been able to extract from their clients".

But the Finance Ministry did not comment on Bermuda's affect on the global insurance market, but they did tackle Bermuda being labelled as a 'tax haven'.

"Bermuda is not a tax haven. We understand that our consumption-based tax model is envied for its efficiency and effectiveness. International and local companies pay taxes on the same basis," the spokesperson said.

In affirmation of the Island's pre-eminence in the insurance marketplace, the spokesperson said: "Bermuda is ranked as the world's leader in captive insurance and has one of the largest reinsurance markets in the world. As such, insurance companies account for about 51 percent of all international company expenditure and 60 percent of local employment within the international company business sector.

The Ministry reported the total number of insurance companies formed in Bermuda in 2001 was up 15 percent over the year 2000 from 94 companies to 108 companies.

The Bermuda International Business Association (BIBA), in speaking of Bermuda's successful corner on the new reinsurance market, claimed infrastructure was key.

BIBA marketing manager Aaron Adderley said: "In the wake of the World Trade Centre attacks, Bermuda has welcomed a number of start-up insurers looking to satisfy the increase in demand in the property and casualty market.

"Certainly these companies could have opted to domicile in other offshore jurisdictions, but what has helped give Bermuda a clear competitive advantage among other things, has been its ability to build a highly competent and advanced infrastructure of support services for the international business client."

Mr. Adderley said: "BIBA's member organisations provide a diversity of fund management, financial, legal, IT, banking and accounting services within a cohesive regulatory framework. Over the years, Bermuda has evolved into a well-developed international business centre and the growth in company-formations is a testament to this progression.

And Mr. Adderley said the end result could be more jobs for Bermudians. "The Island has successfully positioned itself to help satisfy the demand for underwriting capacity in the wake of the terrorist attacks. BIBA is confident that the end result of this impressive growth will be employment opportunities for Bermudians, especially now as we enter into this period of economic uncertainty."