The similarities between Bermuda's captive insurance market and Silicon Valley are just as relevant today as they were at their inception more than 40 years ago, according to US Consul General Gregory Slayton.

Mr. Slayton, who was the keynote speaker at lunch on the second day of Bermuda Captive 07, told delegates that the likeness between the two was startling considering they are essential completely different industries.

And he gave some pointers towards the future and how Bermuda can strive to stay at the top of its game in the captives field.

Mr. Slayton explained that in the 1950s Silicon Valley was still a farming community, while Bermuda was a popular tourism destination, with the captive market being founded in Bermuda the following decade and the national semi-conductor being launched in Silicon Valley at the same time.

Tourism continued to be the main sector on the Island, while the high-tech industry was still only a small part of Silicon Valley's overall economy in the 1970s, before arriving at where they are at today, he said.

"We have now a critical mass with service providers with world class legal advice and we are beginning to see a sharpening of focus with high intellectual capital companies," he said.

"Both Silicon Valley and Bermuda have experienced some pretty intensive boom-bust cycles - obviously 9/11 was a huge tragedy and began a series of boom-bust cycles here in Bermuda.

"In Silicon Valley there was a huge boom and then bust, but there are still a lot of similarities with Bermuda in terms of their history."

Mr. Slayton pointed out that Silicon Valley and Bermuda are both at the top of the tree for their respective main businesses, that of computing and insurance.

"Both Bermuda and Silicon Valley are recognised capitals of their respective industries in the world," he said.

"Here in Bermuda, you have a critical mass of key elements that are promoted such as the service providers, who are the intellectual capital, and the executives, the financial capital, and they come together to make this place what it is.

"Bermuda has also got a high quality of life and a world class infrastructure."

And he issued a note of warning to any politicians thinking about changing the winning formula in both places - to leave well alone.

"Governments always want to get involved in winners and losers because no one wants to see losers, but it is so important for the market to decide the winners and losers," he said.

"I have to commend the Bermuda Government because they have stayed out of the winners and losers market and have always the mind to do that."

Mr. Slayton highlighted education as the key to a successful industry and to promote intellectual capital in any area.

"In an environment such as Bermuda or Silicon Valley, where it is all about intellectual capital, there is nothing better than getting a good education," he said.

"A very significant proportion of Bermudian children don't graduate from 12th grade, but credit must go to the Bermuda Government to recognise this is a failure and to try and change it.

"From my observation there is nothing more important in the US and Bermuda than getting our educational system right.

"Bermuda is a small jurisdiction at 21 square miles, so labour mobility is a big issue and if you don't have labour mobility then you have got to have a good education system in place."

Then, staying with the theme of education, he turned to the future, outlining where he reckons Bermuda should go from here.

"Education is the key for long term success, both on an operational level, on an industry level and even on a family level," he said.

"There is no better investment than putting our time into our children and there is always an opportunity for us to invest in that next generation.

"The 21st century is most definitely about intellectual capital and socialism doesn't work - putting more money into East Germany in 1989, for example, was not the right solution at the time.

"Competition is also the reality of the 21st century - Silicon Valley had a great run, but if you look at Bangalore in India and China you see competition is around all over the place and Bermuda has exactly the same situation, not just facing competition from jurisdictions like the Cayman Islands, but also the likes of Vermont in the US, which is now a tough competitor.

"Intellectual capital is king and it is good to be king because it is about making sure that we and our children benefit from being entrepreneurs or serving entrepreneurs."