Q: Why come onshore?

NL: There is a trend that we would be na?ve to ignore, and that trend is that the onshore domiciles are becoming more competitive and attractive in what they have to offer.

A number of prominent U.S. states have embraced the captive concept and dedicated considerable resources and expertise in producing very workable legislation. As such, it is harder to always recommend an offshore domicile, especially when an onshore domicile makes equal sense, can be easier to access, and is just as flexible in terms of regulation and capital allocation.

We also have noticed that a number of U.S. states are catching up with offshore domiciles in terms of infrastructure, resources and management. This is very apparent in the support services, including legal and accounting.

Additionally, Atlas is talking with some very conservative prospects, and the ability to form their own subsidiary in an onshore jurisdiction, as opposed to offshore, is attractive.

Finally we have to accept the mood on Capitol Hill, whereby U.S. legislators are looking at the offshore industry and asking a lot of questions.

Q: Why D.C.?

NL: We like the legislation, the regulator and the potential market base. There are aspects of the D.C. law that are absolutely unique--such as a segregated cell in a risk retention group, and the ability to transact between cells in the same company--that appeal to us as innovators.

Also, if the incorporated cell is able to elect to be an individual entity for U.S. tax purposes, then we believe we can deliver a lot of solutions to our clients.

The capital requirements are reasonable, and the ability to use a letter of credit instead of cash for surplus is also something that appeals to our clients.

It's interesting that their re-domestication provisions are very straightforward and this sends a clear message.

Q: What's next?

NL: We like the look of Kentucky as well, and that is probably where we'll go next. I don't think it is cost effective to apply for approval in every U.S. state that has captive legislation, so we are choosing domiciles that will work best for our clients.

I also think Atlas will form its own incorporated cell captive in D.C. before long, and we are currently working on three large prospects for D.C.

Q: What's the future for offshore?

NL: If you look out 20 years from now, the onshore domiciles will be the dominant players in the market, with D.C. and Vermont leading the way. This industry has a great ability to develop and grow, and is constantly re-inventing itself.

However, some offshore domiciles are already looking a little tired, especially as they are constantly under review from the International Monetary Fund and other international bodies, and that is a huge drain on resources. It also leads to a general feeling of paranoia.

Additionally, the costs and hassle of international air travel mean that "resort" board meetings are no longer as attractive as they once were. Domiciles such as Cayman will still dominate the health care market, but I see a decline in the competitive edge for other domiciles such as Bermuda, Guernsey, Isle of Man and the British Virgin Islands.

We like Anguilla, and I can see the Bahamas once more moving into an ascendant position--especially for international and South American business.

However, I think that ultimately it will be difficult to argue for an offshore domicile if the onshore ones continue to raise the bar the way the D.C. regulators have.