formations according to an annual study by Tillinghast-Towers Perrin.

The consultancy said captive growth worldwide continued an 18-year upward trend, with new captive formations exceeding liquidations by a wide margin.

The trend indicates companies are opting to self insure through a captive rather than take advantage of the current availability of inexpensive commercial insurance in the market.

A captive insurance company is a closely held insurance company whose insurance business is primarily supplied by and controlled by the owners. The owners are also the principal beneficiaries of the structure. In 1998 new captive licenses totaled 305 worldwide, with strong growth concentrated in Bermuda, the Cayman Islands, and Vermont followed by Guernsey, the British Virgin Islands and Barbados.

Tillinghast-Towers Perrin estimates the total number of captives worldwide as 4,135, up from 3,966 in 1997. The captives had premium of $21.3 billion and total capital and surplus at $54 billion. Premiums increased 18 percent over 1997 figures, while capital and surplus increased by 20 percent.

"Captive insurance is undergoing one of its periodic sea changes,'' Tillinghast-Towers Perrin consultant Hugh Rosenbaum said about the figures.

Tillinghast-Towers Perrin said 94 new insurance licenses were issued by Bermuda in 1998, of which about 63 were estimated to be new captives.