Bermuda saw just one major insurance carrier ? those capitalised at more than $100 million ? set up on the Island in 2004, while the total number of incorporations for the sector fell year on year by more than 13 percent.

Bermuda gave out 77 insurance licenses in 2004 compared to 89 in 2003.

Incorporating activity was also down in December with 12 insurance companies being licensed last month compared to 16 in December 2003.

The only class four ? or highly capitalised company ? to decide to call these shores home was CIG Reinsurance Ltd., which was licensed in late September. However, life reinsurer Wilton Re ? which is classified as long-term under Bermuda licensing regulations ? may also prove a big deal. It has already made headlines after it was announced that leading, albeit beleaguered, broker Marsh was backing the company with some $600 million in initial capitalisation.

Wilton got handed its insurance licence last month after registering on the Island in September. Although clearly meeting the capitalisation criteria for a class four carrier, the company as a life reinsurer is instead classified in the long-term category (See below for classifications details).

Year on year, class one incorporations were down by five in 2004 with 28 licenses being granted for this type of captive insurer compared to 33 in 2003. The number of class two companies ? also generally captive, or self-insurance vehicles ? were almost on par, with 2004 having 12 incorporations compared to 11 in 2003.

But on the class three front, 2003 came out way ahead of 2004 with 33 and 24 new incorporations, respectively. Both years saw the addition of only one class four insurer, while there were 11 long-term ventures (12 if you consider Quanta Life Reinsurance, classified as both class three and long-term) added last year.

That number compared to seven long-term licenses being granted in 2003, although that number is boosted to ten by three class three and long-term licenses.

Glossary

CLASS 1: A single parent captive insurance company owned by one or more affiliates of a group and underwriting only the risks of the owners of the insurance company and affiliates of the owners. Class 1 insurers are required to maintain minimum capital and surplus of $120,000.

CLASS 2: Multi-owner captives which are defined as insurance companies owned by two or more unrelated persons provided that the captive underwrites only the risks of the owners and affiliates of the owners and/or risks related to or arising out of the business or operations of the owners and affiliates. A Class 2 license will also apply to single parent and multi-owner captives writing no more than 20 percent of net premiums from risks which are not related to or arising out of the business or operations of their owners and affiliates. Class 2 insurers are required to maintain minimum capital and surplus of $250,000.

CLASS 3: Applies to insurers and reinsurers not included in Class 1, 2, or 4. This includes finite reinsurers; reinsurers writing third party business; insurers writing direct policies with third party individuals; and, single-parent, group, association, agency or joint venture captives where more than 20 percent of net premiums written is from risks which are unrelated to the business of the owners. Class 3 insurers are required to maintain minimum capital and surplus of $1 million.

CLASS 4: Insurers and reinsurers underwriting direct excess liability insurance and/or property catastrophe reinsurance risks. Class 4 insurers are required to maintain minimum capital and surplus of $100 million.

Long-Term: Life and pension writers with minimum capital and surplus requirements of $250,000

Source: Bermuda Insurance Institute