Bermuda gained 19 new insurance ventures in the second quarter of 2002 with captive insurance companies leading the way.

The breakdown of new incorporations through the period ending in June, and according to the Bermuda Monetary Authority (BMA) Insurance Division records, showed that there were eight class one and four class two companies formed, and five class three companies were incorporated. The additions in the last quarter followed the whopping number of insurance ventures - 74 companies - to set up on the Island after September 11 and through the first quarter of 2002.

Class one companies are defined as single parent captive insurers while multi-owner captives are classified as class two. Class three insurers or reinsurers have a minimum capital and surplus of $1 million. And the largest insurance and reinsurance companies fall in to the class four category with upwards of $100 million in capital and surplus.

Bermuda saw the formation of only one class four insurer in the second quarter - Platinum Underwriters Co. Ltd. - but to date, and due to poor market conditions, the company has been unsuccessful in its capital raising as its initial public offering on the New York Stock Exchange has not gone forward.

The rise in captive company formations could follow the rate increases that continue to dominate in the insurance sector.

A report on the industry released on Friday from insurance specialists at investment firm Morgan Stanley said that it looked like insurance rates would continue to increase. Based on insurance data from the Council of Insurance Agents & Brokers, Morgan Stanley said: "The pace of rate increases continued in the general of 20 to 50 percent through July 1 renewals and terms and conditions continued to tighten.

"All signs are that the market remains in a fair bit of turmoil with companies finding it increasingly difficult to place risk."

As insurance is harder to come by in this market, and more expensive, some firms have found it made sense to set up their own captive ventures. And Morgan Stanley indicated that trend continued with use of "alternative markets" increasing and 20 percent of brokers reporting the use of captives.

Statistics released earlier in the year by AM Best showed that Bermuda was the global leader in terms of number of captive insurance company incorporations.