NU Online News Service, July 21, 2:30 p.m. EDT

The State of Vermont's captive insurance sector reported astrong first half of 2010, licensing 17 new captive insurancecompanies and surpassing 2009 half-year numbers as the state nearsits 900-license milestone, officials said.

This year's new captive insurance companies include 15 "pure"captives--four of which are special purpose financial captives--andtwo risk retention groups, according to data released by theVermont Department of Banking, Insurance, Securities and HealthCare Administration (BISHCA).

Dan Towle, Vermont's director of financial services, said thatVermont is happy with the growth as well as the high interest inprospective captive formations. "It's fair to say this is as deep apipeline as we've had in some time," he noted. "Last year was agreat year--we're ahead of that."

Mr. Towle said the domicile also is encouraged that captives arebeing formed "for all the right reasons--as part of a riskmanagement strategy."

He said Vermont is well equipped to handle the growth. "We'vegot the staff," he said, noting that Vermont has added staff in itscaptive sector.

"This is a very encouraging sign at a time when the nationaleconomy's outlook is still unknown," Sandy Bigglestone, director ofcaptive insurance at BISHCA, said in a statement. "Qualitycompanies like Proctor and Gamble, PricewaterhouseCoopers, CroweHorwath and Towers Watson & Co. still see the value ofestablishing a captive as an integral part of their risk managementregardless of uncertain market conditions."

Ms. Bigglestone, a 13-year veteran with the Captive InsuranceDivision, who recently took over following Peter Raymond'sdeparture in June, credited the state's continued investment in itsregulatory arm and responsive political institutions for thecontinued popularity of Vermont as a captive domicile.

David Provost, deputy commissioner of captive insurance,observed that Vermont has seen much interest from hospital groupsseeking a captive for their professional medical liabilities andsmaller and mid-cap companies. Professional services, insurancecompanies, construction and health care continue to be growthsectors as shown by the newly formed captives for 2010, headded.

Vermont has 895 captive licenses and is the largest captiveinsurance domicile in the U.S. and the third largest in theworld--with an excess of $77 billion in gross written premium in2009.

Captive insurance is a regulated form of self-insurance that hasbeen in effect since the 1960s and is used for corporate lines ofinsurance such as property and liability. Captives have been a formof Vermont insurance since 1981, when the state passed its initiallegislation.