Bermuda regulator, the Bermuda Monetary Authority, is working with US regulators and making its own probe of Bermuda-based American International companies and affiliated firms caught up in a high-profile US investigation.

BMA chairman Cheryl-Ann Lister told last night that Bermuda legislation provided mechanisms for the BMA to assist foreign regulators in their investigation ? and that Bermuda was not only assisting but taking its own actions.

Those actions could include speeding up legislative amendments already planned to tighten up financial reporting requirements for the Island's international businesses.

"We are doing more than monitoring developments. With all of these actions coming up we are taking action as appropriate. We've obviously been in contact with all of the various companies. There has been a number of companies mentioned and any that are licensed, regulated [Bermuda entities, we have contacted and are taking action as we deem appropriate to the various situations.

"On an ongoing basis we liaise with the SEC and we cooperate to the extent that our powers do allow. We have a close working relationship, as appropriate," she said.

"We can only cooperate with regulatory authorities, if it is a regulatory infringement. In the past we have cooperated with authorities on a variety of appropriate matters, and we will continue to do so."

A number of AIG companies, and affiliated companies in Bermuda and elsewhere ? including a private holding company, Starr International Company, that holds about 12 percent of AIG's stock worth a value of some $15.8 billion ? have come under scrutiny by US regulators and investigators in a widening probe of the company's accounting of certain relationships with offshore entities as well as whether it dumped losses through companies it secretly controlled.

New York Attorney General Eliot Spitzer, American public companies regulator, the US Securities and Exchange Commission (SEC) and the US Department of Justice are all conducting AIG probes.

Mrs. Lister said the BMA's dealings would be with its regulatory counterpart, the SEC, while any approach from the other bodies would go to Government. While reports were that Mr. Spitzer's office had subpoenaed documents from some of the Bermuda-based companies affiliated with AIG, and held and controlled by past and present AIG bosses, Mrs. Lister said: "These transactions took place through the New York operation, I think that is what people fail to understand. The subpoenas were issued to the New York office, not individually to the Bermuda company.

"Because AIG has an office here, and Starr has an office here, the reality that AIG is a major global company headquartered in Delaware is lost sight of."

AIG's longtime chief Maurice (Hank) Greenberg severed ties with the company he ruled over for 37 years amidst the growing scandal, while three other senior executives ? including Bermuda-based legal counsel Michael Murphy ? were sacked for failure to cooperate with investigators. AIG admitted over the week-end that an effort had been made to remove documents from its Bermuda building. Reports said that an AIG lawyer for Mr. Greenberg had been loading documents into a van from the company's Richmond Road office. Another AIG employee was said to have been suspected of destroying computer data and recordings of business meetings.

The Bermuda actions ? described by Mr. Spitzer as the "document caper" ? have raised questions over whether individuals could face indictment by US authorities.

Acting supervisor of Insurance Shelby Weldon said any criminal indictments resulting from the US investigation of a Bermuda party involved in the AIG matter would go through the Attorney General's office, falling outside the BMA's regulatory powers.

What the BMA can do is deal with any breaches uncovered at American International in Bermuda or from the other companies named. An attempt by to contact Attorney General Larry Mussenden was yesterday unsuccessful.

Mrs. Lister would not be drawn on the specific actions being taken by the BMA, nor could she say how long the BMA's own probe might take. "These are not things dealt with overnight. We have to ensure that we are taking the right steps," she said.

Mr. Weldon said: "There are mechanisms in our legislation that allows us to assist foreign regulators. There are policies and procedures that any request would have to go through, but Bermuda, as a financial centre, is committed to transparency and cooperation in this regard," he said.

The Insurance Amendment Act 2001 lays out the exact provisions through which the BMA can help outside authorities investigating the actions of a Bermuda-based company or its employees. This includes giving the Authority the powers to demand a company licensed and regulated in Bermuda, and under a bona fide investigation by a foreign regulator, hand over information, records, or answer questions related to the inquiry.

Early drafts of Bermuda's Insurance Act 1978 were prepared by Mr. Murphy, AIG's fired legal counsel.

Mr. Murphy, an American who is a naturalised Bermuda, through the last 30 years built up strong reputation on the Island for his knowledge of US tax laws and the workings of the US Government. He helped the Bermuda Government in several insurance-related legislative endeavours over the past 30 years. In addition to preparation of the earliest drafts of the Bermuda Insurance Act, he was an architect in the mid-eighties of the United States-Bermuda tax treaty. The BMA said it generally keeps mum on investigations. "If we turn up some breach we would require the company to take some action or we would take some appropriate action against the company but we don't normally make our actions public."

However, the BMA could take a different approach this time with Mr. Weldon saying in an earlier interview that he would expect the BMA to issue a press statement eventually.

Since 2003, revisions to the Island's regulation of the insurance sector have been underway when the International Association of Insurance Supervisors (IAIS) upped its number of core principles, including setting a formal standard for reinsurance regulation.

Reinsurance is when a company assumes risk from another insurer. Reinsurance coverage allows a primary carrier to free up capital so it can write more business, and reduce the reserves it is required to set aside for future claims.

The Island's re/insurance sector ? now more than 50 years in the making ? has a combined capital base of an estimated $50 billion, according to Government's 2004 Economic Review.

Mrs. Lister said: "Bermuda has from the very beginning regulated reinsurance which has not been done in many other jurisdictions until recently. "We have been [since 2003 making changes to enhance our regulatory framework, as part of an ongoing process. And we'll continue until we are in line with the new standards."

When asked if the current AIG investigation may have highlighted any weak areas, she said: "I don't think there are specific changes we would make, but it may help to clarify the position we were going in ? and the timing of certain issues that we were going to make."

Mr. Weldon said areas highlighted in this situation were not specific to insurance regulation but financial reporting. "

It is not an insurance regulatory issue, but the manner in which those companies purchasing those particular products chose to record them. Mrs. Lister said: "We have a good regulatory framework. If you look overall at our track record it would support that. You can never regulate to the point that you can stop people from doing bad things. But what we have in place, like any quality regulator, are the provisions to allow us to act in the event that people do contravene those regulations. We have a sound regulatory regime, and generally the performance of the companies we regulate has highlighted that. They are strong, well-capitalised and doing, in the main, business that positively impacts the financial services markets globally.

"Our track record has demonstrated both the quality of both the industry and the regulatory regime we have in place."

In a speech at a financial conference in Trinidad yesterday, Premier Alex Scott said he thought some of the focus on Bermuda was "a consequence of Bermuda's success in these sectors.

"Our reputation as a global player has attracted the attention of the outside world, and not all of that attention can be described as desirable." He said Government was monitoring developments.