taxes if the return on equity is good enough' Brian Duperreault By Roger Crombie Even if corporation tax were to be introduced in Bermuda, ACE Ltd. would stay put. This unequivocal statement was made by Brian Duperreault, chairman, president and chief executive officer of ACE Ltd., at the final session of the 1999 World Insurance Forum on Friday morning.

Mr. Duperreault's reassurance -- although no one had ever suggested otherwise -- came in answer to an odd question put by session moderator Peter Rackley, chairman of Western General Insurance Ltd.

Just at the time that Bermudian Finance Minister Eugene Cox was readying himself to deliver his promise not to introduce any new taxes in his Budget Statement, Mr. Duperreault gamely fielded Mr. Rackley's googly by replying: "The Bermuda tax system is efficient. We'd adjust. It would not be that different for any of the Bermuda companies to overcome. I don't mind paying taxes if the return on equity is good enough. Come what may, we're staying put.'' Mr. Duperreault's answer perfectly illustrated the topic of the session: The Bermuda Greenhouse. For the insurance industry, the message of the day was that Bermuda is an efficient place from which to manage global enterprises.

Its regulatory environment encourages progress and, as a bonus, its tax structure is less painful than elsewhere.

Mr. Rackley had opened the session by asking his panel to explain what had "made Bermuda successful, and what its role might be in the future of insurance''.

"Bermuda is home to some of the world's most innovative insurers and reinsurers. Why?'' asked Mr. Rackley. The panel's response to the question came in the form of an unorchestrated extended metaphor.

Henry Keeling, president and chief executive officer of XL Mid Ocean Reinsurance Company Ltd., referred to Bermuda's "market garden era, when the Island was "a place to nurture young and fragile things''.

He pointed to the seeds of the Island's success by saying that "Bermuda has a marvellous resource of home-grown skill'' and was succeeded by one of the best examples, Mr. Duperreault.

The Bermudian who has built a worldwide empire in just five years at the helm of ACE, a Bermudian enterprise which now has offices in 47 countries and is the largest single provider of Lloyd's coverage was in an ebullient mood.

Bermuda has been "a hotbed for new ideas and a nursery for young companies, which is now harvesting its rewards'', said Mr. Duperreault.

He then proved his point with a moment of theatre, by taking to his feet and crossing the stage floor in the Mid Ocean Amphitheatre. The half-filled room -- a good number of delegates left the Island on Friday flights -- wondered aloud where he might be off to. Mr. Duperreault returned to the panel carrying a large placard bearing the CIGNA logo, a tree in full bloom.

"How did a mid-Atlantic greenhouse allow a young and small company to buy CIGNA?'' asked Mr. Duppereault. The answer was "a well-controlled environment which allowed experiments with hybrids, the development of new species and a government/private sector partnership which keeps the weeds in check''.

Duperreault makes clear tax position As evidence of the abundance of intellectual capital, he reminded us that Bermuda has more actuaries and more golf courses per square mile than any other place in the world. Infrastructure, a well-educated work force, an efficient and just system of justice and world-class legal, banking and accounting services were, Mr. Duppereault might have added, the mulch.

Paul Hellmers, president and chief executive officer of Centre Solutions (Bermuda) Ltd., who has been on the Island just a few months, replied to Mr.

Rackley's call for forecasting by addressing the future of the industry, which he sees as bleak.

"At the next symposium (to be held in 2001), we'll be talking of the 1998/99 markets as the good old days,'' he said, warning of even greater market softening.

"We don't have enough products with high margins or growth potential. We need a different category of places to put our risk capital.'' The nature of the capital markets, he suggested, meant that "it's all about debt''.

He described the global market as "gargantuan'', the debt markets measured in the "tens of trillions of dollars.'' As costs are further squeezed down by the excess of capital, the traditional brokers, Mr. Hellmers said, were poorly positioned.

The future, he suggested, belonged to the bankers, which might have "negative and positive implications for Bermuda''. It might also foreshadow immigration pressures, as well as upward pressure on compensation.

John Kessock, Jr., president of Mutual Risk Management Ltd., went with a different line on the state of the market: he already sees sectoral hardening.

He added that a "very real opportunity exists for Bermuda as the market explodes over the next ten years''.

Mr. Keeling took the middle ground: that "a harder market is on the horizon, within the next 12 to 24 months'', although he was ready to agree with Mr.

Kessock that, in certain sectors, prices have started to harden in certain sectors.

Mr. Kessock described what he called the new Millennium business model as one which achieved greater efficiency of capital; manages returns on equity at or above 20 percent; introduces new product leadership; uses new technology, such as the Internet; and placed an "absolute premium on intellectual capabilities''.

Staying put: Brian Duperreault BUSINESS BUC