The US state of North Carolina’s bid to become a major player in the captive insurance business has been dismissed as a threat to the Island’s sector.

Peter Willitts, director and vice-president of the Bermuda Captive Owners’ Association, said: “Bermuda maintains itself as being the best. It’s legislation is up to date, it’s got a reinsurance market behind them — I wouldn’t say it was a threat.

“It’s like any business. We have to keep on our toes and we continue to do so.”

Mr Willitts was speaking after North Carolina insurance commissioner Wayne Goodwin announced the state had issued its first four licences to captive insurance companies.

The firms are the first to base themselves in the southern state since it passed an act last October to make North Carolina a captive domicile.

Mr Willitts said: “To say North Carolina is a threat overestimates the ability of various domiciles to suddenly create and replicate what for us has taken many years to develop.”

He added that Bermuda’s business environment, access to the reinsurance market and responsive regulators continued to make the Island a “domicile of choice.”

Industry insiders, who asked not to be named, said a number of US states had already tried to create captive domiciles inside their borders, but that Vermont, one of the largest, was most likely to pose a threat to Bermuda.

One added that even Vermont thought that there were too many states competing for business and that “three or four” within the US was probably the right number.

And he added that many companies based in Bermuda had opted to be US taxpayers, while much of the business in the US was from the lower reaches of the market — unlike Bermuda, which is home to major players in the sector.

Mr Willitts added: “Bigger, more sophisticated companies want a well-regulated, well capitalised, well-regarded jurisdiction and that is what Bermuda is.”

Mr Goodwin said: “North Carolina is off to a strong and promising start as a captive domicile. With our state-of-the-art law and commitment to the success of captives, I am confident we will become one of the most desirable states in the country for the formation and re-domestication of captive insurers.”

Martin Eveleigh, chairman of Atlas Insurance Management, based in Charlotte, North Carolina, which was responsible for setting up three of the state’s four new captives, told AM Best that the three new captives were small.

He added: “In the relatively short time available, this was a great way to get going.”

Mr Eveleigh said that captives could be attracted to North Carolina because it does not impose applications fees, can waive a required audit of captives’ financial statements and does not insist on annual examinations of the financial health of the captive market.

He added that there also seemed to be flexibility as North Carolina appeared regarding the amount of capital that had to be in place based on the captives’s size and actuarial feasibility.