XL Capital Ltd. and American International Group are looking to sub-let part of their premises, The Royal Gazette can reveal.

Coldwell Banker Bermuda Realty's commercial representative Graham Smith told the paper the estate agent had been instructed by XL to market its North Tower in XL House on Bermudiana Road to prospective tenants.

AIG has requested the same for a space on its ground floor at the AIG Building in Richmond Road.

Ace is not planning to sublet any part of the Ace Global Headquarters on Woodbourne Avenue, according to an Ace spokesperson.

Ernst & Young (E&Y) has also refuted reports it was set to move into the Ace building.

Kelly Ferris, E&Y's marketing manager for Bermuda, Bahamas and Cayman, said the company was considering all of its options, but nothing had been decided yet.

"Our options are to move or stay and we definitely haven't made any decisions yet," she said.

"But we are definitely not moving into the Ace building."

International companies like AIG and XL are not generally permitted to do business inside Bermuda. However, the law allows for them to be given permission to rent out their real estate.

Finance secretary Donald Scott said that under the Companies Act 1981 the Finance Minister could give consent for sub-letting leased premises held by international companies. Such permission is usually "routine in nature", he added, and allows the firms to optimise the utilisation of their office space.

He said that as far as XL, AIG and Ace were concerned, the relevant consents are held on company files in the Registrar of Companies and are transparent and available for public inspection.

Mr. Smith said XL and AIG had asked Coldwell Banker to find them paying tenants.

"I have been instructed by XL to market the North Tower and AIG to market a tiny little space on the ground floor, which is quite insignificant in the overall size of the building," he said.

George Cubbon, general manager of AIG's Bermuda operations, said the company was not looking to downsize its staff base, but rather to optimise the space it has.

"It is not because we have got rid of any people, it is purely because we are looking to make use of the space more efficiently," he said.

"It gives us some freedom to utilise and rent out some of the space that we have."

He said there had been interest from two potential tenants in the approximately 1,500 square foot space, but they had to pull out due to reasons unrelated to the space.

XL did not respond to a request for comment.

AIG, dragged down by heavy losses related to credit default swaps, was saved from collapse by a US Government bailout which has stretched to around $150 billion.

XL has also been hard hit by investment losses and its past exposure to troubled financial guarantor Syncora Holdings.