Bermuda cannot afford to be complacent or take its position for granted in the face of London's status as a top global financial centre being threatened by rising tax and the regulatory burden of doing business.

That is the message from Ed Noonan, CEO of Bermuda-based re/insurance company Validus Reinsurance Ltd., whose parent company owns insurance underwriter Talbot Holdings Ltd. which operates through Syndicate 1183 at Lloyd's of London.

But Robert Hiscox, chairman of Hiscox, which is based in Bermuda and operates in Lloyd's, reckons both markets are doing well and re/insurers with a foot in each camp are getting the best of both worlds.

London's plight could be viewed as an opportunity for Bermuda to take advantage of the situation and attract more companies to the jurisdiction, or a warning sign that the Island needs to buck up its ideas to maintain its position as a leading world financial destination or risk being knocked off its perch.

Mr. Noonan believes tax-based competition was heating up, but that was only part of the equation.

"A well respected regulatory regime, stable government and legal system, access to world financial markets and a highly-skilled labour pool are also critical in attracting financial service firms," he said.

"Quality of life issues are terribly important as well. High quality schools and medical care, housing, cost of living, culture and receptivity to ex-patriot workers and their families are all factors that weigh on the decision.

"I think Bermuda scores well in many of these areas but we are not alone in attractiveness as a domicile and we can't afford to be complacent."

However, he cautioned that Bermuda should be wary of falling into the same trap as London.

"The Island is in good shape, but we can't take our position for granted," he said.

"We need to be ever mindful of US tax policy, and active in stating our case as well as the value that we bring to the US. Regardless of who wins the election, there is change coming from Washington and we need to be sure that it is not harmful to the Island."

Mr. Hiscox said there was pressure from Lloyd's of London's Peter Levene to ease the tax burden and that London had to provide a competitive advantage, both in regulatory and financial terms, but he thinks it can continue to enjoy its symbiotic relationship with Bermuda.

"The ideal situation seems to be that of a Bermuda/London tie up, which appears to work extremely well," he said.

"Insurers have come from London to Bermuda and Bermuda to London and, if you can be in both places, it works extremely well — it seems to be a popular formula from both ends.

"London is big market and gives access to all the businesses, whereas Bermuda is a very good place to have a head office and where you possibly write some of the more complex risk that does not need thousands of people — the issue of Bermuda has just been size.

"I think Bermuda is doing all the things it needs to do — the Bermuda Monetary Authority is making it a place that is considered to be a comparable regulatory place to anywhere in the world.

"I think it is recognised that the international business community is the largest contributor to the whole country, and on that basis I think we all get on fine."

A report by Bloomberg last week revealed that a number of firms were quitting London for places such as Dublin and Zug in Switzerland because of the high taxes and regulatory issues, with Henderson Group plc., a UK money-management firm, which was formed in 1934 and has £59 billion under management, leading the charge by saying in August it planned to move its tax base to Ireland, while hedge-fund company Krom River Partners LLP announced its plans to move from the English capital to Zug.

It said that London needs to respond fast in light of stiff international competition for business.

"The one issue that stands out above all others when companies discuss quitting London is tax — either corporation tax or personal tax,'' said Mark Yeandle, a senior consultant at Z/Yen Group Ltd., which has produced reports for the city of London on its competitiveness as a financial centre.

With Irish corporate taxes at just 12.5 percent, less than half the British rate of 28 percent, the report claims, that while companies may be shifting their tax base at first, other jobs will follow, with Krom River, a $180 million hedge fund based in London's Mayfair district, one such example of a company switching to Switzerland to enjoy the lifestyle benefits as well as the favourable tax rates.

"The tax treatment of Lloyd's in the UK must be amended,'' said Lord Levene at a dinner in London's financial district last week. "It is under threat from other markets.''