He added that while Vermont has had no problems with RRGs, “at the same time you have to keep your eye on them–especially medical groups.” To make sure the groups are in for the long haul, he said Vermont's RRGs are generally sponsored by large medical facilities or teaching hospitals.

o South Carolina

Jeff Kehler, program manager for the South Carolina Insurance Department, reported 29 captives licensed in 2006. This year, 13 have been licensed (nine pure, three special-purpose financial captives and one RRG) and seven are pending. He predicted 25-to-30 by the end of 2007. South Carolina has 20 special-purpose financial captives.

Mr. Kehler said South Carolina's new director, Scott Richardson, was previously part owner of an insurance agency in Hilton Head, and understands both the government and private business sectors. “That is ideal for us because in the captive area, we are part regulator and also charged with providing a robust business climate for the captive industry,” he said.

Mr. Kehler has seen a number of companies “utilizing their captives to fund retentions on property and windstorm,” a key coverage for coastal exposures.

o Hawaii

Craig Watanabe, captive administrator and deputy commissioner, said Hawaii has four new captives and another four in the works. Last year, Hawaii had eight new captives, compared with 18 in 2005 and 30 in 2004.

Two reasons for the drop, he noted, are the softening market and “all the new U.S. domiciles coming on board. I think, overall, captives are being used and forming–it's just spread out over a lot of states.”

While the number of captives may be down, he said, “last year our captives wrote about $1.7 billion in premiums, with total assets of about $6.1 billion. So volume-wise, it's still up there.”

He said two new laws were approved at the end of June. One created a maximum premium tax of $200,000, and the other includes allowing captives to organize as limited liability corporations.

He added that Hawaii is looking to add a specific amendment for securitizations, since there are “other types of securitizations that can be done, especially with the Asian market.” Two of the eight captives licensed last year were Japanese, and another Japanese captive was licensed in April.

o District of Columbia

Associate Commissioner Dana Sheppard said the District has licensed a total of 74 captives, including four this year and 10 in 2006. He projects 10-to-12 for 2007.

Mr. Sheppard noted that with the softening of medical professional liability for nursing homes, “about a month ago I had three RRGs call and say they wanted to close down–within a five-day period.”

“That's the problem with some of the entrepreneurial RRGs,” he said, adding that to abandon RRGs “is short-sighted, and it suggests the people weren't motivated to be long-term owners of an insurance company. They just wanted cheap insurance.” Having them shut down is “always the fear, and the same thing can happen with physicians, builders or other groups,” he added.

He said D.C. has licensed one RRG this year, “and we've been selective about what we take.” Of those turned away, he said, one wanted to take a group from another RRG. “So, a year from now he'll take them out of our RRG and take them someplace else where he can get a better deal. The service providers have more choices now because there are a lot more domiciles.”

RRGs, he said, involve much more oversight than regular captives, “and because they don't write in D.C., in many cases, we get the minimum premium tax.”

o Arizona

Rod Morris, Arizona's administrator of captive insurance, said 13 captives have been licensed this year, with four applications pending.

“We're seeing a lot of general liability and deductible reimbursement for GL and workers' comp,” he said. “We're seeing more property-related coverages like earthquake and terrorism, and professional liability/med mal.”

Arizona's statute was amended, which goes into effect Sept. 19, to enable branch captives for employee benefits only while allowing group captives, like pure captives, to insure controlled and affiliated business. It also reduces the minimum captive requirements for protected cells from $1 million to $500,000.

o Nevada

Deputy Commissioner Gary Cooper said in 2006 34 captives were formed, with nine added this year and 11 more in the pipeline.

“We'll project around 35 for this year,” he said. Mostly licensed were pure captives and RRGs. “We probably write three pures for every RRG,” he said. “Out of our 105 [total captives], we have 31 RRGs,” which are primarily for professional liability.

o New York

Deputy Superintendent Michael Moriarty said New York has a total of 42 captives, with six licensed in 2006 and three in 2007. “For this year, I would say we are looking for a total of 50 at year end,” he said.

The captives are all pure, with the domicile seeing real estate developers and companies with property in Manhattan forming terrorism coverage entities to access the federal terrorism backstop.

He said legislation will be re-submitted this year to cut the threshold for formation of pure and group captives and to allow protected-cell captives. “We're somewhat confident that the new (Eliot Spitzer) administration will take a new look, and we're trying to get some traction,” he said.

“We're not here to compete,” he added. “Our goal is to provide New York-based companies with the opportunity to manage their risk through a self-insurance mechanism and not have to go outside the state to do it.”

He added that the growth in the number of states enacting legislation for captives is “evidence of the fact that a captive is not an alternative risk management strategy anymore. It's really a mainstream strategy that a lot of large commercial enterprises are taking advantage of, and we expect that trend to continue, so we want our legislation to be cognizant of that and allow more flexibility for this type of self-insurance.”

o Delaware

Captive Administrator William P. White said Delaware, which has 12 captives, recently passed legislation for special-purpose financial captives.

Under the existing captive law, the special-purpose provision was broadened, with the idea that Delaware was not going to be amending a law for every type of new captive.

“So they identified some key types of captives with the idea that there are basically three types: single parent, groups, and anything that doesn't fall into those two areas being special purpose.”