Hannover Re, the world's fourth largest reinsurer, is considering re-locating to a low-tax jurisdiction - but not Bermuda.

Wilhelm Zeller, the chief executive of the Germany-based reinsurer currently worth $5.5 billion, told a press conference at the annual reinsurance gathering, Le Rendez-Vous in Monte Carlo that the company will look at moving its headquarters away from Germany.

"For us, the ideal location, from a fiscal point of view, would be Ireland," said Zeller. He said, however, setting up headquarters in Ireland would be expensive.

He added: "Germany was not such a bad place to run a reinsurance operation from." But he told the world's business press that a possible re-location would be considered.

Dublin has proved a popular choice with other reinsurers. Most recently, Partner Re announced it was consolidating its European operations and would be run out of Dublin.

Dublin has a flat-rate corporation tax of 12.5 percent which is charged on the company's profits which include both income and chargeable gains.

The corporation tax in Ireland is quite low compared to Germany's 25 percent - one of the lowest in Europe. Being in Ireland has the advantage of being part of the European Union and its low-tax status is often cited as an example of tax competition, as it is used as an incentive for foreign companies to invest in the Irish Republic.

At the largest reinsurance gathering in the world, 2,500 brokers, reinsurers, modellers and IT professionals gathered to start to hammer out prices for reinsurance for 2008.

Another hot topic was a new European law called Solvency II and yesterday one of the world's leading experts said that it would shrink the European market and cause companies to fold or lead to mergers and acquisitions.

The law, which is scheduled for implementation in 2012 and has been hugely controversial in the industry, puts in place new risk-based capital requirements for re/insurers.

Rob Jones, a director with Standard & Poor's in London told a press briefing: "What is surprising about Solvency II is that it is actually likely to result in more insolvencies than under the Solvency I regime. That is because under Solvency I, there was an almost zero tolerance for failure." He said this does not exist under the proposed new requirements. He said the European insurance market will be trimmed further through mergers and acquisitions in the wake of Solvency II, Mr. Jones said.

"We think consolidation is going to accelerate as a result of its implementation," he remarked. "That is because of the diversification benefits that are available, particularly to the larger groups. That is going to be a pricing advantage for those companies. But perhaps more importantly, the smaller companies do not have the skills and people that are needed under a Solvency II supervisory framework."