according to ratings agency A.M. Best Co.

Bermuda has kept its number one spot with 1,405 captives registered on the Island -- more than two-and-a-half times as many registered by the Island's nearest rival the Caymans, which has 535 captives.

Bermuda now holds 31.5 percent of the world's total captive market of 4,458 captives in 2000, according to Best's Captive Directory 2001 Edition.

But the rush to set up captives in Bermuda is slipping, with Caymans catching up with the number of new captives set up in the year 2000.

In Bermuda, 51 new captives were formed during the year, 20.8 percent of the market, while Caymans had 48 -- 19.6 percent.

Bermuda still best in the world A.M. Best Co. reported that their data shows steady growth rates for captive insurance companies -- between 4.5 percent and 5.5 percent over the past several years -- with an acceleration in growth in 2000.

By year-end 1999, the alternative insurance market comprised nearly 40 percent of the total commercial market in the United States, and A.M. Best said it believes that market share will approach 50 percent in 2003.

A.M. Best analysts also indicated the market for captives will continue to grow in 2001, due to a continued firming trend in prices in commercial lines, and in spite of pressures from a deteriorating stock market and regulatory authorities.

The report added that during 2000, regulators and other independent sources in the various captive domiciles indicate that 245 new captives were licensed, while 170 were liquidated, for a net gain of 75, up 31.6 percent over the net gain in 2001.

A.M. Best said price firming trends, especially in the middle market, have not yet triggered a widespread migration of insureds to self-insure through alternative markets, though `sustained price increases will only increase the likelihood that sophisticated insurance buyers will more seriously consider an alternative market solution over the mid-term.'' The information is published in Best's Captive Directory, which lists all captive insurance companies throughout the world.

Hot issues and emerging trends in the worldwide captive market, according to the directory, include accelerated growth in Europe and Asia; greater transparency in offshore captives; a move by health-care captives into insuring medical malpractice for on-staff physicians; and more companies in the United States diverting their life and health benefits into alternative market vehicles such as captives, in the wake of a US Department of Labour ruling allowing Columbia Energy Corp. to insure employee benefits in their captive (Columbia Insurance Corp. Ltd., domiciled in both Vermont and Bermuda).