Bermuda finalized a bilateral tax information exchange agreement with the Netherlands, bringing its total number of such agreements to 12 on June 8. Twelve is the required threshold for the countrys removal from the OECDs grey list of tax havens.
This development has no direct rating implications for Bermuda-domiciled insurers or reinsurers, but the promotion of Bermuda to the OECDs white list removes some uncertainty regarding the islands ability to maintain its position as a key global insurance and reinsurance hub.
According to Moodys Investors Services, if Bermuda had not complied, there might have been some deterioration in business prospects over time, and therefore risks to creditors, as the international community might create obstacles to "offshore" reinsurers.
The renewed emphasis among the G-20 countries on targeting tax evasion and avoidance made possible by the existence of tax havens could result in significant adverse economic consequences for jurisdictions that remain non-compliant with OECD guidelines, analysts said. Recently, there have been proposals to change the U.S. tax code to target the tax treatment of reinsurance on U.S. affiliate-sourced business by offshore-based insurance and reinsurance groups, particularly those located in designated tax havens.
