one of the world's best offshore financial centres.

The reasons for the growth in international business are many, but Bermuda's reputation for careful vetting of companies which wish to incorporate and for honesty in its dealings has been key. It also has a fairly unique form of self-regulation in which the private sector and Government work together to keep out "bad apples'' and to develop regulations which are practical and stringent.

Yet one well-publicised failure of a company could smash Bermuda's reputation in a flash and the industry's leaders and regulators should be working hard to ensure it does not happen.

To that end, there have been two cases recently which should concern anyone who is interested in the success of the sector.

In neither case has there been any legally proven evidence of impropriety and it would not be fair for this newspaper to assign blame when both matters remain before the courts. But perception can become reality, and in the cases of the liquidations of Bermuda Fire and Marine and Electric Mutual Liability Insurance Company, perceptions of Bermuda have been mostly negative.

In the case of Fire and Marine, questions have been raised about how an insurance company could divide its profitable business from its unprofitable business when the "bad'' business was very bad indeed and getting worse.

Whether the move was legal or not will be decided by the courts, but it has hurt the Island's reputation among those reinsurance companies which are now being pursued to provide money for the creditors of Bermuda Fire and Marine.

Similarly, reinsurers are unhappy with the handling of the EMLICO liquidation.

EMLICO, a Massachusetts-based insurer owned by General Electric -- also its sole policyholder -- moved to Bermuda as an operating company but went into liquidation soon after.

Reinsurers say the company must have known it was, or soon would be, insolvent before it moved and only did so because Bermuda's liquidation laws were more friendly to creditors than those in Massachusetts.

There is no suggestion that Bermuda was involved in any kind of fraud in this case, but the Government, saying there is little it can say while the matter is before the courts, has made hardly any public statement about the case, giving the public impression that it is happy with the way it has been handled.

Recently, the US trade magazine Business Insurance said: "Bermuda's hands-off attitude in this case should be a concern to all companies -- particularly reinsurers -- that do business in the domicile.'' And Standard & Poor's, one of the two most important insurance company rating agencies, said: "Unfortunately, the bankruptcy filing of the newly domesticated Electric Mutual Liability Insurance Company once again raised concerns about the level of regulatory supervision accorded Bermuda-registered insurers.'' It would be naive to think that the reinsurers have no axes to grind in either case. They are in the risk taking business and it is a fact of life in the "risk business'' that insurers go bankrupt, usually to the detriment of both the reinsurer and the policyholder.

Bermuda's regulators have to do the right thing -- and to be seen doing it -- or the Island's reputation will suffer -- as it is now.