Bermuda captured 20 percent of the new captive insurers formed last year, a new report has said.

The latest figures were published in the 1998 Captive Insurance Co. Directory by Tillinghast-Towers Perrin, listing 3,966 captive insurers worldwide, including 3,077 single-owner and 889 group-owned vehicles.

More than 300 insurance buyers formed their own captives in 1997, instead of chasing the good deals available in the soft market, and out of them about 60 were formed in Bermuda, the world's largest captive domicile.

But the Cayman Islands issued 50 new captive licences and Vermont and Guernsey issued 27 each. The British Virgin Islands registered another 23. More than 60 percent of new captive sponsors were from the US, while about 20 percent were European.

Directory editor Corinne Ramming said, "Continuing soft market conditions and last year's consolidation among reinsurers and brokers haven't affected the decision of many insureds to take control of their own risks over the long term.

"These insureds are passing up today's bargain-basement deals in favour of a strategy that enables them to manage their own investment income and avoid price spikes and possible loss of coverage down the road.'' Tillinghast-Towers Perrin defined a captive as "a closely held insurance company whose insurance business is primarily supplied by and controlled by its owners, in which the original insureds are the principal beneficiaries.'' Captive insurance premium was last year estimated at $18 billion, while invested assets were about $103 billion, with capital and surplus estimated at about $45 billion.

Tillinghast Towers-Perrin listed some 45 entries of rent-a-captives in the directory, compared with 18 the previous year.

Bermuda captures new insurers A rent-a-captive is an insurer or reinsurer organised to handle the property /casualty risks of several insurance programmes. Participants could rent the use of a captive, rather than setting up a stand alone vehicle. In Bermuda and Guernsey, the "cells'' in a rent-a-captive can be legally separated from those of other participants, shielding each from the losses of others.

During the year, five private cell rent-a-captives were licensed in Guernsey, and more of Bermuda's rent-a-captive sponsors opted for legally separated cells through a private act of Parliament. Tillinghast Towers-Perrin estimates there are nearly 1,000 rent-a-captive and private cell accounts, with estimated total premium of a billion dollars.

Tillinghast Towers-Perrin is a global firm providing management and actuarial consulting to the insurance and financial services industries.