write, as companies seek to use them to write almost all their insurance, according to Peter J. Willitts, senior vice president of Sedgwick Management Services (Bermuda) Ltd.

Speaking during the IBC Captives Conference, Mr. Willitts explained his vision of the future for the exploding captive industry, which includes a lot more captives, with each writing a lot more business.

He recalled how just months ago he foresaw Bermuda insurance market assets reaching $100 billion around the turn of the century. He said today, it is already closing in, with more than $90 billion.

Good reasons for the continuing proliferation in captive formation include costing issues, risk management issues and profit opportunities.

But he said corporate directors will increasingly push their risk managers to look at the bigger picture, including issues such as earnings per share and company protection, as opposed to simply buying insurance cover.

Mr. Willitts said captives will then be formed providing multi-year, multi-line cover that will protect the corporation in its widest sense.

He said, "Then you can go out to the reinsurance market to protect for specific excess coverage or cat coverage.

"But I think companies will end up putting a lot of the stuff they insure, like property and casualty, bonds, transport and boiler room machinery -- they are going to slap everything -- in the captive, bundle it all together and think in terms of corporate protection, instead of in terms of asset protection.

"They will think of the exposure in terms of its potential on earnings per share. I think it will be almost everything. Of course, if you can buy it in the market cheaper than your own loss projection, then you will buy it. The soft market is a big issue, right now.

"But I'm talking about chucking everything into the pot and then pulling one or two things out.

"For example, I do exclude D&O because of the circulatory nature of it. The shareholders could have a problem with that. It would perhaps be seen to be politically cleaner to go outside for that.'' Mr. Willitts said the wider move to captives is well underway, and has only been temporarily slowed by the soft and competitive insurance market.

He sees external challenges to captives, but said that President Clinton's tax initiatives that could make it more difficult for captives in Bermuda and other offshore jurisdictions, may not have a broad negative impact.

Those initiatives require more third party, or non-related, business for insurance companies for them to qualify for the US tax exempt status that insurers enjoy.

He said, "What's going to happen is that people are going to become more creative. It is already happening. A lot of people are already forming ideas that create the required non-related business. It's happening here and in the Isle of Man.

"But tax changes in the US and Britain are an area of challenge for the market. There are also regulatory challenges, and challenges like the soft market itself.

"There are also pressures from other domiciles, pushing and shoving between onshore and offshore domiciles. Every time one says they can provide this service, there is an implication that the other side can't.

"You are also creating an industry of experts, which is an added cost, which goes against the reasons for a captive.'' BUSINESS BUC