Utah saw the numbers of captive insurance companies in the domicile increase by almost a fifth in December 2009, with 28 captives formed in that month alone, bringing its total to 148.

Ross C. Elliott, captive insurance director in the Utah Insurance Department said the increase came as something of a surprise. “We thought we’d have about 20 for the year, 25 if things really worked out well,” he said.

Utah currently licenses predominantly pure captives, with one RRG and one SPFC. “We didn’t want to get into some of the more complex structures because we didn’t have the experience to handle that,” said Elliott.

“We’re educating ourselves and attending conferences so we can learn more about group captives, RRGs and segregated cells,” he said.

Half of the new formations in December were licensed on behalf of Utah Captive Insurance Managers, a local manager affiliated to Active Captive Management.

Michael McKahan, chief operations officer for Active said captive clients’ interest in Utah was largely geographical in nature, with the majority of new formations coming from Utah itself, as well as western states such as California, Oregon and Arizona.

He added that the timing of new formations was also based on economic factors. “The majority of clients did not have a firm comfort level with their operating capital to make a decision about affording a captive this year,” he said.

According to McKahan, Active had a number of clients with programmes that were fully designed and ready for approval but who were waiting to assess the status of their year-end cashflow.

“None of these clients are on a shoestring budget, but when you’re looking at making a five year or more commitment to at least $1m in premium, this past year more clients were holding back until they knew what their tax numbers were going to look like going into 2010,” he said.