"We're very pleased," Leonard Crouse, Vermont deputy commissioner of captive insurance, told National Underwriter. "We have some good, strong programs, and I couldn't be happier with the quality."

Last year, 77 captives were formed?a record number for the domicile. The high number was a result of the medical malpractice crisis, which he noted has since "waned a little bit."

Mr. Crouse anticipated, "We'll do the same next year," even though the market may be softer still. "Generally group programs slow down in a soft market. They're usually driven by a hard market?insurance is expensive and hard to get."

Licensing of pure captives, however, "has been steady over the years," he said.

Mr. Crouse noted that some large corporations with existing captives have used them for terrorism coverage. He noted that the Terrorism Risk and Insurance Act continues until the law sunsets at the end of the year. "We'll see what happens then," he said.

So far this year, Mr. Crouse said the domicile has nine captives in the pipeline.

Companies that licensed captives in 2004 include Wal-Mart stores, Best Buy Company, John Deere & Company, USA Hockey Inc. and Textron Inc., according to state officials.