Oil company executives believe that creating a captive insuranceoperation to handle their risk could help the value of theiroperations, according to a brokerage' firm's survey.

The finding was contained in a report on the oil and gasindustry from the insurance brokerage firm Marsh, a subsidiary ofthe New York-based services firm Marsh & McLennanCompanies.

Based on a poll taken earlier this year of more than 400 seniornational oil company executives at the National Oil CompaniesConference in Dubai, the survey found that 62 percent of executivesbelieve captives can add "significant value" to a national oilcompany, while the remainder said it could add some value.

Fifty-two percent said forming a captive would reduce the amountof premium paid to external markets, while 32 percent felt thebenefit would be the ability to tailor wordings and contractconditions.

The remaining 13 percent said the primary benefits from acaptive would be the ability to manage and handle claims andcollect data associated with the risk.

The report noted that of all the industry groups throughout theworld, oil occupies a very small portion of the internationalcaptive pie. Mining, metal and minerals occupy 3 percent of theglobal captive picture, according to Marsh.

Many oil companies have operated captives for a number of years,including Petro SA, Saudi Aramco, PDVSA and Kuwait Petroleum Corp,according to Marsh.

The report details the purpose and advantages of captives,noting that a national oil company may first set up a reinsurancecaptive until the entity becomes more familiar with captiveoperation.

Globally, Marsh said there are marked differences in captiveinsurance companies throughout the world. Parent companies inEurope, the Middle East and Africa favor the reinsurance captivestructure more than other regions of the globe.

The full risk report is available at www.marsh.com.