European captive insurers may decide to move offshore if imminent new insurance rules known as Solvency II prove to be expensive for them.

That is the view of the executive manager of the European Captive Insurance and Reinsurance Owners' Association, Jeanette Rodbro.

Captives provide a form of self-insurance to corporations which own them, wholly or partially. Bermuda is the world's leading captive domicile, after the United States.

Legal experts who spoke at last year's Bermuda Captive Conference said they believed Bermuda captives would not be directly impacted by Solvency II, but EU risks they cover would be subject to individual state approval.

Bermuda is striving to achieve regulatory equivalence in time for the introduction of Solvency II, scheduled for 2012.

Speaking to InsuranceNewsNet, Ms Rodbro said: "Moving would not be that difficult. There are often no employees to consider."

"If you apply for and achieve regulatory equivalence with the EU, then the assets of your reinsurance companies will get full recognition within the Solvency II calculations in Europe" said Dominic Wheatley, managing director of Willis Management in Guernsey.

Switzerland has joined Bermuda in pursuing regulatory equivalence, while Guernsey has not decided yet whether to follow suit

But there are many jurisdictions, including the United States, where adopting Solvency II for captives is not even being considered. Wheatley said that, in the long term, Solvency II might be part of a wider trend toward more consistent regulatory standards, not just in insurance but in all aspects of finance. But he doesn't think the trend is imminent or that Solvency II ultimately will govern the capitalisation of captives throughout the world.