Bermuda is in danger of losing out to other domiciles in the race for the captive market, according to Aon.

Stephen Cross, chief executive of Aon Captive Services Group, said captive domiciles, such as Gibraltar, and onshore US locations, such as Arizona, South Carolina and Vermont, were enjoying "solid growth".

But in Bermuda, he said, some re-feasibility studies were being undertaken and many investors were asking whether they needed to reassess their captive strategies in the wake of Hurricane Katrina, which "went beyond the expected range of losses".

The number of captives domiciled in South Carolina increased nearly four-fold between 2002 and 2004. The number in Arizona more than doubled in that time, while the number in Ireland increased by 90% (see box)

In contrast, there was no growth in Bermuda's captive numbers between 2002 and 2004, although it continued to remain the largest domicile by far.

Cross said Arizona's lack of premium tax made it particularly attractive for companies looking at setting up captives.

He added that Dublin was also a growing market for captives, despite recent negative publicity about perceived loose regulations in Ireland.