Bermuda, is to cease trading as a self-managed captive insurance company with the loss of 12 jobs. The company is in discussions with Marsh Management which should lead to Marsh taking over the captive as a managed captive.

Heddington is a wholly-owned subsidiary of Texaco which covers its parent's global property and casualty programmes and also has a role in its aviation and marine insurance.

Tom Dougherty, Heddington's chief executive officer, described the company as being at the centre of virtually all of Texaco's worldwide operations.

"For 30 years the people of Heddington have made an enormous contribution to Texaco's success,'' he said.

"However to remain competitive it is necessary to change the company's service delivery model. These changes will keep Heddington strong and competitive in the future.'' Mr. Dougherty said the move to a managed captive had nothing to do with the Texaco/Chevron merger.

"It is strictly a Heddington decision to help us capture greater operating efficiencies,'' he said.

"We have been here 30 years, but as we looked at the competitive landscape we came to the conclusion that our delivery mode is not the best for the future.

"We find it necessary to look at what our competitors are doing and evaluate our costs. The trend started years ago in the industry towards managed captives.'' He explained that when the move takes place, eight -- six of whom are Bermudian -- of the current 20 employees in Heddington's Church Street office will be re-employed by Marsh and will be responsible for the Heddington captive. The other 12 will, he regrets, be made redundant but there is the possibility of two of these being employed within the Texaco group.

Mr. Dougherty anticipates the discussions with Marsh will be concluded within the next few weeks.

Over the years a number of US captives have set up self-managed captives to suit their tax position, but have subsequently fallen by the wayside. As the industry has grown so has the strength, expertise and size of captive management firms which makes a managed captive a more attractive proposition.

Jill Husbands, senior vice president at Marsh Management Services in Bermuda, said, "We have certainly seen a trend towards managed captives in the last few years. The level of experience managers can offer has grown tremendously and this can be brought to our clients.

"Captives have a life-cycle. Our role as managers is to get them started then sometimes they get their own staff and leave our stable. But then things can change and it becomes economically unviable to self-manage so the captive returns in-house to us at Marsh.