The prognosis for international business in 2011 is even more uncertain than ever before.Companies have been slashing staff and budgets and many have left Bermuda’s shores altogether.The high cost of doing business on the Island, a low interest rate environment offering minimal returns on investment and the looming threat of the Neal Bill have all added to their woes.The one positive note throughout the whole financial crisis has been a buoyant insurance industry.Premier Paula Cox’s administration has made a lot of the right noises so far and ministers have held high-level meetings with respective industry leaders and key stakeholders to listen to their concerns.However there is still a foreboding sense of unease about the place and one only has to look at the empty shops and restaurants and vacant parking lots to realise that what was once a top global business centre is now struggling like the rest of the world.David Burns, head of Schroders Bermuda, said Bermuda faced the same consumer-driven issues as the rest of the world but they could be tackled using “the right measures at the right time” including more flexibility on work permit term limits and a better promotion of the Island.Mr Burns said that the high cost of running a business and its staff and living expenses also needed to be addressed in order to keep it attractive.“I think it can be done and the new Government is such a breath of fresh air everyone wants to work together on these issues to make it work,” he said.“The main trend, I think, is more dialogue between business and Government which is fluid and realistic.”He also believes that the US tax threat has diminished with the election of a new Republican senate and Bermuda needed to fight back against being labelled a tax haven and state the case for the important role it plays in the world economy.Tim Faries, partner at Appleby (Bermuda), who specialises in insurance, said that 2011 would be a pivotal year for the industry in Bermuda, particularly in light of achieving Solvency II equivalence.He said that while the number of new formations had risen in 2010 from the previous year, both years were historically low and the economic conditions were not conducive to start-ups.But he maintained that special purpose insurers were on the increase and the Island remained competitive with other jurisdictions such as the Cayman Islands, while looking to boost its share in existing markets and expand into new ones like Canada and Latin America.Nobody has been immune to the recession. International law firms Conyers Dill and Pearman and Appleby (Bermuda) made 13 and 11 redundancies respectively last month, while insurer Ace Ltd has revealed plans to cut 17 jobs from its Bermuda workforce this year. Fund administrator Butterfield Fulcrum also axed ten staff from its Bermuda office in August last year following a review of the distribution of work at its operational centres and more companies are expected to follow suit.Commodities broker Seaboard Overseas Ltd also announced last month the closure of its Bermuda office in April with loss of 12 jobs and the operation being relocated to the Isle of Man.In its ‘Bermuda 2011 Market Update’, Fitch Ratings said that Bermuda’s re/insurance market remained strong and should be well-placed to capitalise on a future upturn, despite the challenges of the current highly-competitive market.The report expects that the Island’s re/insurers would report favourable full-year results for 2010, even after taking a $3.1 billion hit in catastrophe-related losses during the first nine months of the year.But it also sees the current soft market cycle persisting and applying downward pressure on insurance rates, with premium rate changes for most lines written by Bermuda market re/insurers down by between five and ten percent during January renewals.AM Best Co concurs. Its view is that the Island’s re/insurance market is coming under increasing pressure from low insurance rates. It feels the market cycle has yet to reach its trough, with profits substantially bolstered by loss-reserve releases and capital retrieved after claims for loss events less than what was set aside to pay them.In an economic outlook round-up for 2011 which ran in the business section of this newspaper at the start of the year, Association of Bermuda International Companies’ (ABIC) chairman George Hutchings said the contraction of the international business sector was a warning sign that Bermuda needed to be smarter, better and more competitive to attract new business to the Island.Mr Hutchings said that in the face of increased competition from rival jurisdictions, ABIC and Government needed to ensure that Bermuda reaffirmed its position as the domicile of choice. He added that in order to maintain and add jobs in the international business sector, companies need to grow and new trade must be brought in, with specific industries targeted and invited to set up in Bermuda.He said that in line with Ms Cox’s Throne Speech, ABIC needed to work with Government to address these and other issues, while maintaining a regular dialogue with the appropriate ministries and providing constructive feedback and ideas.In the same report, the Association of Bermuda Insurers and Reinsurers’ president and executive director Brad Kading said that Solvency II would be top of the agenda for most re/insurance companies during 2011.