While the financial market crisis and the deepening recession are being blamed for a drop in captive insurer formations in some domiciles, the captive business is far from dormant, with at least two domiciles actively licensing more facilities and others hoping a hardening commercial insurance market might spur more alternative risk-transfer activity.

Nancy Gray, executive director for North America at Aon Insurance Managers, predicted that 2009 will be similar to 2008, with "continued new formations, but along the same trends of expanding the captive use and also the number of new formations."

In particular, she noted, "we're seeing signs of the market hardening in some lines--that will have an impact on captives."

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