“I think it's too early to make a call,” she said. “When we were in Monte Carlo [for September's annual Reinsurance Rendez-Vous conference], we talked to market participants from Bermuda, and it seemed that the overall levels of concern had declined.”

In her report, she noted that one of the biggest reasons for leaving Bermuda “may be the possibility that the U.S. (and possibly other countries) could change its tax treatment of U.S.-sourced business going to Bermuda and other low-tax domiciles.”

She warned that “this could mean that (re)insurers based in these low-tax jurisdictions may be required to pay higher taxes related to business originated in the U.S. or other higher-tax jurisdictions.”

She speculated, however, that while it's possible a looming tax change could strip away some advantages of domiciling in Bermuda, “it is not as imminent as thought a few months ago. There have been delays in discussions about this in Congress. So I would say it's a little soon [to worry].”

She added that the scope of the proposals by the Obama administration has changed, and that there now are several different proposals on the table.

“The scope is different depending on which proposal you're looking at, so it makes it difficult to determine what impact there might be on companies,” according to Ms. Carvalho. “We continue to expect that this will not be a ratings driver.”

The impact may be negligible in any case, however, because large global reinsurers have set up subsidiaries in many parts of the world.

“They write global business–they could change domiciles if necessary for whatever reason,” she explained. “They could change domiciles without a major impact to their operations, or no impact at all.”

If there are tax changes made by the United States, she said it's possible that a number of Bermuda companies will think seriously about re-domestication, “but whether they will decide to move is another question. There's a possibility they may find the changes are not meaningful,” she noted.

Companies in Bermuda have made their voices heard in Washington with regards to the taxation issue, according to Ms. Carvalho.

“Bermuda has been very active on the regulatory side,” she said. “Looking at Solvency II coming in Europe, for example, Bermuda has made efforts to beef up their staff,” as well as improve and enhance regulatory oversight, she noted–referring to the updated set of regulatory requirements for carriers doing business in the European Union, due to be implemented in 2012.

“I would say they are not being left behind–they are staying ahead of the curve, in fact,” she said. “And it's still an island that is one of the main centers of reinsurance business in the world…There are reasons to stay.”

Bermuda has been active in responding to foreign concerns on multiple fronts, meeting with U.S. officials and tightening regulations overseeing money laundering as well as financial services. Indeed, on Oct. 1, Bermuda announced publication of three new papers:

o “The Consultation Paper on Eligible Capital,” outlining the Bermuda Monetary Authority's planned approach to determining capital resources eligible to meet regulatory capital requirement levels.

o “The Discussion Paper on Own Risk and Solvency Assessment,” or ORSA, a process that involves requiring firms to demonstrate the link between their capital model, risk governance and strategic decision-making. The process helps regulators better understand the risk-profile of companies.

o “The Consultation Paper on the Insurance Code of Conduct,” which builds upon and codifies the governance standards already established within the jurisdiction of Bermuda.

(The three documents are available at www.bma.bm.)

Duncan Aitken, a director with BMS in London, said that with the tax situation in general, and legislation up in the air, “it remains to be seen whether a trend to re-domicile to places like Ireland and Switzerland will take hold.”

He agreed that large reinsurers are nimble and prepared to pivot in whatever direction is needed without adversely affecting their organization.

“I think it will be interesting to see what happens jurisdictionally,” he said. “As you know, there are discussions in various parts of the world about what might happen in offshore areas about taxation.”

In London, for example, he said the markets are keeping an eye on taxation in the United Kingdom. In fact, he noted, one or two Lloyd's syndicates decided to re-domicile in 2008 to Holland, and some Bermuda reinsurers have re-domiciled to Switzerland.

“So I think that might be an interesting development to watch,” he said. “And we know it is coming; it's just a matter of what form it comes in.”

He said that most insurers and reinsurers utilize enterprise risk management practices and “have some form of exit strategy from the current jurisdiction they operate in.”

Ms. Carvalho said in her report that ongoing issues in Bermuda include its limited resources, and the increasing difficulty of obtaining work visas, finding permanent offices and living spaces, as well as schooling for foreign workers' children.

“Currently, many employees from the Class of 2005 companies (Bermuda start-ups that were formed to take advantage of favorable market conditions following Hurricanes Katrina, Rita and Wilma in the U.S.) commute to the island during the week and return to their homes in the U.S. over the weekend,” she noted, adding that companies have compensated by having fewer employees on the island and more working from other locations.