Bermuda’s appeal as a jurisdiction for start-up companies will be diminished due to the country’s quest for Solvency II equivalence.That’s the view of Fitch Ratings company, which issued a statement yesterday.“We feel Bermuda’s regulatory framework will, at a minimum, become less flexible as a function of its seeking equivalence, thus reducing its appeal as the preferred location for start-up companies,” the company said, adding that insurers operating under Solvency II will likely be required to hold more risk capital, which may boost reinsurance demand — but not in Bermuda.Fitch did add that Bermuda’s “overall market reputation should improve, with further enhancement of the island’s solvency protection standards”.Bermuda is one of the first three jurisdictions seeking Solvency II equivalent status, along with Japan and Switzerland.Last week the Bermuda Monetary Authority (BMA) stated that they were confident that Bermuda will win Solvency II equivalence after high-level talks with EU officials in Brussels.Fitch also announced that while insurance industry concerns factored into Tuesday’s downgrade of Bermuda, it does not expect Bermuda’s reinsurers to be affected.“All our ratings of Bermuda (re) insurers remain below the new sovereign rating, which also has a Stable Rating Outlook. The country ceiling remains at ‘AAA’,” the company said in a statement.Fitch added that a majority of the assets and liabilities of Bermuda’s reinsurers are diversified globally, and “thus we do not have concerns regarding a concentration of risk in the country”.“We do expect that Bermuda, as a nimble market with close US proximity that rapidly adapts to fit capacity needs, will continue to remain an important global (re) insurance market and should be well positioned to take advantage of recent improvements in the underwriting environment. Furthermore, Bermuda (re) insurers overall weathered the recent heightened catastrophe losses seen in 2010 and 2011, although some companies experienced more strain than others.“That said, we believe a shifting regulatory landscape continues to present both opportunities and threats, as the Island faces competition from other jurisdictions, tax-status scrutiny, and changing collateral rules.”