Captive Community Grew in 1999.

Another 250 captive insurance companies were formed last year, according to Best's Captive Directory 2000 edition. Given the 156 liquidations reported by regulatory and industry sources, the net gain for the year was 94.

Captives typically are established as risk-transfer vehicles by corporations whose primary business isn't insurance. Many are formed because insurance is unavailable or unattractively priced. Of the 4,199 active captives listed in this year's directory, 77% are single-parent captives. The next most common type is group owned. According to the recently published directory, 906, or 22% of captives, are organized this way.

Captives wrote an estimated $28 billion in net premium last year, a 15% increase over the $24.3 billion written in 1998, according to the directory. In addition, captives had an estimated $70 billion in capital and surplus, up 30% from the previous year, and $137.6 billion in invested assets.

The four domiciles with the most captives--Bermuda, Cayman, Guernsey and Vermont--continued to show strong growth. But the British Virgin Islands outstripped their growth with the formation of 51 new captives--a 20% captive growth rate for that domicile.

The British Virgin Islands are benefiting from a captive law enacted in 1994 and 1995, said Terence Rollins, manager of insurance services for AMS Group in Tortola, British Virgin Islands. "It takes a few years for people to get really comfortable and to have some trading history," Rollins said.

The British Virgin Islands' captive law makes it an easy place to do business, Rollins said, noting that licensing is simpler and less expensive than in Bermuda, an attorney is not required to establish the captive and annual meetings do not have to be held there.

"It is smaller, more informal and there is less of a requirement for paper to be kept here," he said.