Hong Kong business executives have been enlightened as to how Bermuda developed into the largest captive domicile in the world.

They were attending the 1st East Asian Captive Forum at the JW Marriott Hotel in Hong Kong, sponsored by leading captive service provider, SINSER Holding Ltd.

President of SINSER Insurance Ltd. in Bermuda, Nicholas S. Dove, noted that while Bermuda led the way in captive formations with about 90 new companies in each of the last two years, captive formation continues at the same pace this year.

Mr. Dove, who is also the president of the Bermuda Insurance Managers Association, pointed out that the parent companies of these Bermuda captives, which previously were almost exclusively American, now come from a wider variety of countries.

"No longer is Bermuda considered a domicile for US subsidiaries alone,'' he emphasised.

"In recent years, the interest from South and Central America and Japan reflect the deregulation of the insurance industry in those countries, and in the case of South and Central America, the relaxation of exchange control regulations.

"South Africa, with its new found freedom and re-entry into the world economy, has started to get the religion of captives.

"We have had various enquiries from Eastern European countries and a couple of Russian captives have been formed. Although, in many such countries, the very term `insurance' is unknown.

"Despite this evolving world movement, still two-thirds of Bermuda's captives are from the US. The percentage from other (countries) is growing.'' The two-day conference, which wound up Thursday, attracted corporate general managers, financial managers and risk managers from 12 countries who are interested in exploring the use of captives as risk financing tools. There was considerable interest in Bermuda.

The meetings offered an overview and insight for those less familiar with captive insurance concepts, but also attracted insurance and reinsurance executives, brokers, accountants, lawyers, bankers and consultants.

SINSER is Skandia International's worldwide captive management organisation, a group of management and consultancy companies specialising in providing service to, and management of, captive insurance and reinsurance companies around the world.

Managing more than 260 captives, SINSER is not only present here in the world's captive capital, but also in Vermont, Guernsey, Dublin, Singapore, Luxembourg, Gibraltar and Isle of Man.

The number of worldwide captives is approaching 4,000 and continues to increase, despite the softness in the worldwide insurance market.

Even though the markets are saturated with insurance suppliers, which over several years has steadily driven the market price of insurance down, captive insurance companies are still seen as an attractive and important option, as a dominant feature or as an adjunct to corporate insurance programmes.

Mr. Dove told the conference of the huge success and diversity of the Bermuda insurance and reinsurance market, explaining that it is by no means just about captives, but a "true force in the world's insurance economy.

"It does remain, however, the pre-eminent domicile for captives today, there being approximately 40 percent of all such companies worldwide, incorporated there.'' He said, "A risk manager can set up his captive, buy reinsurance for the captive, buy large layers of excess property and casualty coverage, and buy his directors & officers (D&O) coverage. And do it all by walking down the street. A true one stop shop.'' He explained the conservative underwriting stance almost universally adopted here and provided significant detail of the strengths of the Bermuda market and domicile.

But he added: "International business includes far more than just insurance, such as shipping, investment, trusts, aviation, etc.

"In fact, a considerable number of companies quoted on the Hong Kong Stock Exchange moved their holding companies to Bermuda prior to the hand over (of Hong Kong from the British to the Chinese).'' Hong Kong's commissioner of insurance, Alan Wong, told the conference that insurance regulations had recently been amended to accommodate the formation of captives in Hong Kong.

He will encourage the territory to become Asia's leading captive domicile, with specific aim at the enormous Chinese economy.

SINSER also used the conference to announce the formation of their new Hong Kong Captive Management Agency.