The future of Bermuda's economic health looks good, according to one of the world's top investment analyst companies, Moody's Investors Service.

In a good-news annual report on the economic state of the Island, prudent economics and low debt were cited as principal factors in the company awarding the AA1 rating.

The rise of international business, rather than tourism, was welcomed and the report said continued growth in this sector would be a stabilising factor in the economics of Bermuda.

And Moody's praised the Bermuda government for its actions in encouraging e-commerce.

The author of the report, Steven Hess, said Bermuda's international business registrations, now at 11,000, increased more than 50 percent during the last decade.

And he pointed to the insurance sector, representing 1,500 registered companies, as the most significant of these markets. The report said this sector continues to grow briskly, followed by trust and pension funds, shipping, and investment management.

It states that Bermuda also has a significant locally based $15 billion banking sector.

However, it pointed out that dependence on international business makes Bermuda susceptible to downturns in the North American and European economies.

But Mr. Hess said over the medium term it said these economies should continue to provide impetus.

He added that Bermuda's government is also encouraging development of new e-commerce-based lines of international business.

The report states the robustness of Bermuda's international business sector has helped keep total public and private sector external debt at a low 15 percent of gross domestic product and unemployment at less than 2 percent. Mr.

Hess added that international business employment is likely to exceed that of the tourist sector, which has seen the decline in visitors by air partly offset by cruise-ship passengers, who tend to spend less than air passengers do.

Efforts by the Organisation for Economic Cooperation and Development and the governments of industrial countries to "harmonise'' tax regimes in offshore centres may, however, pose a possible threat to Bermuda's offshore business sector.

Moody's said it believes this threat will likely have little major impact on the insurance sector, in particular, which is the most important part of Bermuda's offshore business.

The company said that overall, Bermuda's stable macroeconomic environment has enhanced its growth as an offshore international business centre.

And virtually all of its foreign-exchange controls have been eliminated, with equivalency between Bermuda and U.S. dollars assuring monetary stability.

Moody's is a leading provider of credit ratings, research and analysis covering debt instruments and securities in the global capital markets.

Founded in 1900, Moody's rates the Bermuda government's ability to repay its debts and also provides rating services on Bermuda banks and other companies.

MOODY'S REPORT SAYS: Moody's Report says: AA1 rating due to `prudent economics and low debt'.

Growth in international business a `stabilising factor'.

Bermuda government praised for its actions in encouraging e-commerce.

But dependence on international business makes Bermuda `susceptible' to downturns in the North American and European economies.