"We're looking at expanding two other forms of captives," he said. "Protected cell agency captives and group captives?nonassociation."

He said interest in the domicile is high because of the existing and proposed legislation and the current hard market, but the state's location is also proving to be a benefit.

The domicile is drawing interest from the upper Midwest?"the Minnesota, Chicago, Detroit crowd," and the West Coast states as an alternative to Hawaii.

Mr. Marshall, who previously worked in the private sector as senior vice president of Frontier Insurance Company's alternative risk division, said he was impressed with the domicile's commitment to captives. The department, he said, is one of the few with a dedicated captive manager.

"Now the ball's in my court to build a division, attract the business, and once it comes in, monitor and regulate it," he said. The department plans to add staff as needed, he said.

Mr. Marshall explained that Arizona's legislation is similar to Vermont's except for two points: There will be no premium tax in Arizona; and the domicile doesn't need branch captives for life and benefits coverage. Those two coverages, he explained, "can be formed under our captive law."

Mr. Marshall said he has drafted changes to the captive legislation and will finalize them with Chuck Cohen, the state insurance commissioner. The legislature will most likely consider any changes in the fall, he said.

Mr. Marshall said he represented the Arizona domicile at the Captive Insurance Companies Association conference in March, but won't attend the Vermont Captive Insurance Association conference in August. "I think it's inappropriate that one domicile go to another domicile's conference and try to attract business," he said.

He said he also plans to attend the World Captive Forum being held in Florida this year.