ATLANTA -- Finance Minister Grant Gibbons yesterday gave US business people insight into one facet of Bermuda's success that Americans find hard to comprehend.

Corporate executives, faced with state insurance regulators that are often in an adversarial role to business, listened during a near two-hour Bermuda International Business Association (BIBA) breakfast at the Ritz Carlton Hotel as the Minister explained how the government sees itself as a partner to business.

Dr. Gibbons said, "We see ourselves as one half of a partnership whose other half is international business itself. We have a clear sense of a need to work together with the business community to constantly refine our business legislation and to ensure that our regulatory system works efficiently.

"A government that is responsive and customer driven is part of Bermuda's success. So is an understanding that we can never take our success for granted.

"In my budget speech, I underscored a fact which has not been lost on any sound businessman in Bermuda, the sectors of Bermuda's economy that have been most successful in the last ten years are those that compete most broadly on a global scale -- the insurance and financial services sectors.

"The obvious lesson is that Bermuda needs to learn from that success, and apply the factors which have contributed to it, to other sectors of the Bermuda economy.'' The Minister used the deregulation in Bermuda's telecommunications industry as an example of how protectionist legislation sometimes can be a disadvantage.

He said, "Protectionism has its uses, to be sure. But in the longer term, it encourages a type of weakness which becomes ever more costly to maintain.'' He did concede that telecommunications services provided by Cable & Wireless and the Bermuda Telephone Company were quite good. But he said the laying of another fibre optic cable link to the US by TeleBermuda International will make it better.

The licencing of a number of new companies to provide a variety of new services has already, he said, reduced the average cost of long distance calls in January by 11.8 percent. Another area of deregulation is the incorporation of mutual funds, with government giving the Bermuda Monetary Authority greater regulatory discretion, leading to increased interest in Bermuda registration.

"During the last 12 months,'' Dr. Gibbons said, "the net asset value of these companies increased by 36 percent to $18 billion, with 183 new vehicles being established and increasing the total number on the registry by 27 percent to 859.'' He discussed the development of the Bermuda Stock Exchange and the formation of two new insurance exchanges to market new products -- Catex International Ltd., which provides on-line risk trading, and the Bermuda Commodities Exchange, in which AIG plays a part.

Dr. Gibbons also talked of the high level of "intellectual capital'' which exists in Bermuda, noting that a recent study on "information age literacy'' placed Bermuda second among 147 nations, immediately behind the US, in terms of the number of radios, telephones and televisions per capita. The UK placed a distant 19th, he added.

And Bermuda's Internet provider, Internet (Bermuda) Ltd. has estimated that the number of Internet PC hosts equals about ten percent of the population -- two to three times the connectivity in the US.

But the Minister said that his February budget devotes more money to Education than any other department.

Gibbons makes pitch to US audience The investment in education includes a commitment "to integrate computer and Internet technology into the system so thoroughly and pervasively that computers become as much a part of everyday life to the generation now in school, as pens are to all of us.

"We have high standards, and we believe the expense of developing those high standards is well worth it, because we believe it is wise to be at the top end of the market.

"We believe that a country with high standards will attract businesses and businessmen with high standards. We don't cut corners and we want to live up to our responsibilities as a good citizen of the financial world.'' Dr. Gibbons indicated government work on preparing a new Proceeds of Crime Act to help the Caribbean Financial Action Task Force (CFATF), of which Bermuda is a member, to fight money-laundering. He agreed no one nation can do it alone.

He said the new act "will formalise the existing codes of conduct that have governed our actions in this field for some time.

"We are well known for wanting to pick and choose those companies that register in Bermuda. This has meant that our register contains about 9,000 companies, not the 100,000 that might be there if we were less careful.

"We do so because we believe our international clients want to be assured that they are in good company.

"The type of legislation which the CFATF is recommending dependent territories pass will insist on the type of knowledge we have required of our international register all along.'' He also explained how Bermuda's gross domestic product (GDP) grew by 4.5 percent during the 1995/96 fiscal year and projected 2.5 percent to three percent growth this year.

He said Bermuda's average growth over the last three years of 2.5 percent is a similar growth path to that of the US. And inflation, he said, has remained at about 2.5 percent since 1992.

A balance of payments surplus of $147 million in 1995 was followed by a good year again in 1996.

Government expenditure is maintained at under 25 percent of GDP, with borrowing permitted only for capital investment, and by policy, total borrowing is maintained within ten percent of GDP.

Moody's Investors Services have attached a Double A credit rating to Bermuda's sovereign debt, which places it on par with Singapore and New Zealand.

International business, half of which is represented by insurance and reinsurance, has led other sectors in recent years. International companies spent $527 million in Bermuda in 1995, up 22 percent from the year before.

Speaking to about 150 people, Dr. Gibbons said, "While many of you know us as an innovative insurance jurisdiction -- we continue to be the world's largest market for catastrophe reinsurance, with a 32 percent market share -- the truth is that Bermuda's world class international business industry has also established a leadership position in the areas of asset management, mutual funds, equity and commodities trading.

Clearly, the insurance sector has been the engine of this growth. But it is important to note the synergy between the insurance and financial sectors and the manner in which that synergy is giving rise to innovative products and services that are virtually unrivalled anywhere else in the world.'' Bermuda's market capital and surplus rose 24 percent to $36.9 billion in 1995, representing unencumbered and dedicated capital contributed by some of the world's leading insurance and investment corporations, such as JP Morgan, Goldman Sachs, AIG, Gen Re and Marsh & McLennan.

He said, "It is not the `innocent' or `naive' capital Bermuda had in the late '70s and early '80s. I should also mention that the Bermuda market's total assets grew by 25 percent, to $95 billion in 1995.'' Dr. Gibbons talked of Bermuda as a more complete insurance centre with a more diverse range of products, including finite risk, property catastrophe, excess liability, D&O, satellite, aviation products, property and professional liability.

GRANT GIBBONS -- Spoke in Atlanta.