That doesn't mean it isn't harder to pass muster when launching a new facility in Bermuda these days, according to Raymond J. Rocchio Jr., vice president of the specialty markets division with PMA Companies in Blue Bell, Pa., who said Bermuda is working to be “viewed slightly different than the perception of the domicile in the past” from a regulatory standpoint.

As a result, some of the disclosure requirements facing captive owners have “taken on some new twists in the last couple of years. Clearly, it's more challenging today.” He said the scrutiny is toward understanding ownership of the captive and disclosures of personal assets for better transparency.

While the process of forming a captive in Bermuda can be “onerous to go through, you can clearly see what they are trying to do,” he said.

“Given the worldwide challenges,” Bermuda has taken strides in becoming more transparent and is making efforts to “continue to be the global leader in the alternative market, and certainly a big player in the reinsurance market,” he said.

An ongoing trend in Bermuda is formation of segregated cell companies–popular because the cell captive's funds are not co-mingled and its exposures are walled off from other sponsors, according to Mr. Rocchio, who added that Bermuda is working to attract middle-market players.

He observed that medical malpractice and employee benefits players have shifted the focus on new captive formations, due to some state issues on health care and doctors' difficulties in obtaining coverage. While some other domiciles have cornered this market, he said, Bermuda has been responding to the need in order to gain a stronger foothold.

Historically, Mr. Weldon said, Bermuda has not seen as much business in the area of special-purpose vehicles as it would have liked, “but now we've set up to encourage a lot of that business to seek Bermuda as the place to set up those vehicles.”

He continued that while Bermuda traditionally has been a home to larger captives, the segregated structure offers more incentive to the middle market. “When you have seen a downturn in captive formations, a number of companies that normally would have set up individual captives will go through the segregated account structure,” he said.

Bermuda, he noted, has seen a number of instances where a company launches its first captive initiative through a segregated cell, then “the program gets large enough for them to establish a separate captive in Bermuda as a result of that experience. So we hope that will help generate additional business as we move forward.”

As for looming legislative threats, such as efforts in the U.S. Congress to hike taxes on offshore entities, Mr. Weldon said, “when you do have those issues that may bring uncertainty as to how the regulatory framework will play out, contingency planning is a prudent thing to do. But from our perspective, we are continuing with our initiatives and will continue to manage/legislate/supervise captives as we have always done, so Bermuda will react accordingly once those international issues resolve themselves, whether they be from the U.S. or the E.U.”

“So there's not really much we can do about it,” he added, “except to continue to provide a framework–a regulatory approach that appropriately supervises captives and creates an environment that captive owners find advantageous for their insurance solutions.”

From a numbers perspective, he said, “whether you look at incorporations or premium volume, Bermuda still assumes its leadership position.” He said all captive domiciles have experienced some declines in new launches over the last two years, noting, “I would expect a lot of that is a direct result of the financial crisis.”

Market dislocations of the magnitude we've seen, he added, impact all the financial services. “So we are weathering that storm. We have seen a slight increase in our incorporations in 2009. Our indications for 2010 seem to suggest that we are anticipating further increases. To the extent the global economy continues to recover, we expect that will have a positive impact on the captive sector.”

Bermuda, he said, is optimistic and continues to interact with its client base and its service providers to provide an environment that encourages captive formations. Without a doubt, he said, Bermuda offers a large base of service providers.

“The Marsh's, the Aon's continue to have a significant presence in Bermuda,” Mr. Weldon noted. “They continue to interact with us on a frequent basis, such that we keep them apprised of what we are doing from a supervisory, regulatory perspective, and we keep our pulse on what's happening in the market, so we can adjust accordingly.”