The "Bermuda Tax" issue will not disappear in the wake of the events of September 11, says Brian Duperreault, chairman and chief executive officer of ACE Ltd.

Speaking to The Royal Gazette following the release of the Bermuda insurance giant's third quarter results in which the company reported a net loss (excluding net realised gains) of $390.1 million, Mr. Duperreault said the Bermuda insurer's reputation as a good place to do business had increased after proving they were able to pay out large claims.

Bermuda's insurers and reinsurers are currently liable for between $2.2 and $2.3 billion dollars, with ACE taking an after tax hit of $558.8 million, but in the wake of the disaster prices have hardened and a number of companies have set up on the Island to take advantage of the situation.

This could add fuel to the fire of the US legislators who see Bermuda as a tax haven and claim insurers set up on the Island to avoid US income taxes.

Mr. Duperreault said: "I have always said that I thought the tax issue would stay for some time. I don't think it is going to disappear. But I will say that if you look at what has happened to the Bermuda companies, they have incurred large losses."

They will pay their claims and I think there is a recognition globally that the reinsurance that has been placed was placed for good business reasons and I think that the companies who did place it I am sure grateful that they did so."The Bermuda Tax issue or "Bermuda Loophole Bill", as it has been come to be know, was originally put forward to Congress in 2000 by insurance rivals in the United States.

The bill - which captured business headlines for much of 2000 - was introduced by a group of US based insurers who lobbied congress to plug a tax loophole system which they said was allowing Bermuda based reinsurers to avoid income tax in the US.

It was listed as the Reinsurance Tax Equity Act of 2001 (H.R. 1755) and its opponents, both in Bermuda and around the world, said it undermined maintaining a competitive and innovative global insurance and reinsurance marketplace and disrupt the marketplace.There has been no news from Capitol Hill or the four US insurance giants behind the Bill - Chubb, Hartford, Kemper and Liberty Mutual - since the September 11 attacks.

It is feared that since the explosion of new insurance companies to Bermuda in the wake of September 11, that there would be a backlash from the US.This, despite unconfirmed reports that anti-Bermuda "tax loophole" lobbyists Chubb are set to open their own $1 billion dollar insurance company to take advantage of the shortage of capacity in the property casualty markets.When asked what he thought about the new wave of insurers to set up on the Island, Mr. Duperreault said: "I think that if you look at the history of Bermuda, there was in the mid-80s a crisis, and out of that was born ACE and XL. In the early 90s, after Andrew (hurricane) we had maybe seven companies form. Well this is another point in the insurance history where there is a severe loss and that usually produces opportunities and new companies and I am not surprised that new companies are being announced and certainly not surprised that they are picking Bermuda, because Bermuda is the place, if you wanted to form a new company, I have always said.

"And the insurance business does not grow in a uniform straight line, it jumps, and it jumps at times of crises and we have one now."When asked if ACE was to set up any new insurance companies in the wake of the attacks, Mr. Duprerreault remained coy.He said: "You know we are, we say, an acquisitive company and we make a lot of acquisitions. I don't think we are done yet. But our focus is on the immediate need of our clients."