Premier Jennifer Smith yesterday said that more captives were setting up in Bermuda this year - and urged risk managers to set up their captives in Bermuda.

Speaking at the seventh annual International Captives Congress (ICAP) at the Fairmont Southampton the Premier said that Bermuda was the number one captives domicile - and an ever growing number of captives were setting up on the Island.

Ms Smith said that at the end of December 2002, there were 1,641 international insurance companies on Bermuda's register - an increase of 39 over the previous year and of this number of new incorporations, more than 50 percent were captives.

She added: "There is some indication during this year, and I trust as a result of this conference, that those numbers will again increase significantly."

This year's conference, which has a host of international as well as local speakers this year, is looking at captives as a solution to the hard market in the insurance industry - and Bermuda is being touted as the domicile of choice.

Ms Smith said as she opened ICAP: "The Question is: "Does the choice of domicile really make a difference?" My response is that of course it does. That's why there can only be one choice - Bermuda.

"The answer is Bermuda because of our ability to respond swiftly, efficiently and effectively to shortfalls in the industry; an ability - it is true - developed as a result of a favourable regulatory environment and a sophisticated infrastructure. Government has worked assiduously over the years to establish a `high quality' reputation for Bermuda's international business and financial services sectors. You deserve to be in a quality jurisdiction with other discriminating businesses because your company deserves the best."

The Premier welcomed delegates and spoke about the catastrophic events of September 11 that have changed the world - and the world's perception of risk.

"We have seen large-scale loss of human life, loss of business and property, loss of financial security and finally, loss of trust. As a result, and more importantly, we have experienced a profound loss of confidence in the security and safety of our communities and even - our homes.

"The key words that drive the insurance industry are risk, loss and protection. You, as risk managers, know better than any one that we are living in uncertain and rapidly changing times - for yours is the business of managing uncertainty and change."

And she said that during the week ahead, the presentations delegates will attend will help to redefine these words in the context of today's market difficulties.

"World events are compelling industry experts world-wide to engage in strategic planning to defend against ever new challenges," she added.

"The conference agenda is designed to be challenging, stimulating, and informative and I urge you to take full advantage of all that is offered here this year. In particular, I encourage you to network with the experienced and key players of Bermuda's own captive insurance market.

"As the world's leading captive jurisdiction, I believe that Bermuda can play a pivotal role in meeting your needs for protection and for positively influencing your bottom line."

She added that Bermuda's exemplary conduct as an offshore jurisdiction was "unrivalled".

"Our monitoring, supervision and regulations are above reproach because Bermudians do not wish to be associated with any unsavoury business practices," she said. "And we certainly support efforts to clamp down on illegitimate business activity."

And she said that businesses come to Bermuda precisely because of its good reputation and the Island's integrity is a "reflection of their own self-worth".

Ms Smith said: "Bermuda takes seriously its prominent role as an international business centre and we will take whatever steps are necessary to ensure that our reputation is not only maintained but enhanced.

"To do so requires close co-operation between government and the international community, and I am proud to say that when a problem exists, we get together to rectify it."

And she pointed to the heightened corporate governance oversight created by the United States Sarbanes Oxley Act, which made it ever more important for risk managers to be seen by their boards of directors to choose those domiciles with the best. She went on to say that Bermuda's Government maintained an open relationship with the business community.

"Ours is a partnership that works together to meet the needs of business and the interests of Government," she said. "Bermuda values its prominence as the leading captive centre and continues to take the steps necessary to maintain our reputation and uphold the integrity of the companies within our jurisdiction.

"As evidence of our continued good standing, Bermuda has emerged from a round of intense scrutiny of offshore jurisdictions with our reputation intact."

And she pointed to the recent International Monetary Fund (IMF) review of the Bermuda insurance market, which said that Bermuda's insurance regulation was ahead of international standards for reinsurers because Bermuda provided the same degree of regulatory oversight to reinsurers as applied to insurers.

And she pointed out that geographically being only two hours from the coast of the US made Bermuda ideal for setting up shop.

"Today, Bermuda remains the captive domicile of choice for risk managers seeking to take advantage of the synergies that are created when you have the world's largest captive insurance domicile located in the same jurisdiction as one of the world's most significant excess insurance and reinsurance markets," added Ms Smith.