Bermuda was founded in 1609 by Sir George Somers, admiral of the English ship "Sea Venture," which wrecked near the island. Word of the island's discovery-which was first spotted by a Spanish sailor, Juan de Bermudez, in 1515-and its reputation for storms spread rapidly, later inspiring William Shakespeare to write "The Tempest."

It was almost 250 years later that the island's beginnings as an insurance center could be seen. Some key milestones in Bermuda's insurance history include:

1840: Bermuda Marine Assurance Co. founded. The company insured cargo en route from Bermuda to Philadelphia aboard the "Liberty" ship.

1947: American International Co. Ltd. was formed in Bermuda to write all of AIG's non-life business. An act of Parliament provided for the company's formation.

1948: International Reinsurance Co. becomes first reinsurance company to operate in Bermuda.

1963: Fred Reiss founds Bermuda's first captive management company, International Risk Management.

1966: Exempted Undertakings Tax Protection Act assures freedom from any Bermuda tax computed on a company's profits or income until the year 2016.

1968: Marsh & McLennan Cos. Inc. forms captive manager Marsh & McLennan Management Services (Bermuda) Ltd.

1971: Oil Insurance Ltd. formed by a group of oil companies seeking coverage for their North Sea rigs. Issues first policy in January 1972 as Bermuda's first group captive.

1971: Bermuda officials, undertaking the first informal count of captives, find that up to 150 captives are incorporated there.

1972: Hopewell International Insurance Ltd., a property risk pooling facility, is formed to allow captives to access reinsurance markets.

1977: Mutual Risk Management founded in Bermuda as a captive manager. The company would become the largest provider of rent-a-captive programs.

1978: The Bermuda Insurance Act is passed. The Act was established to increase Bermuda's credibility as an insurance center for captive insurance and reinsurance.

1978: Trenwick Reinsurance Co. Ltd. is created in Bermuda by four former executives of General Reinsurance Co.

1980: Bermuda Independent Underwriters Assn. formed.

1981: Bermuda has 1,017 registered insurers, writing $4 billion to $5 billion in premium.

1984: Risk Exchange Assn. is formed by the Bermuda Captive Insurance Cos. Assn. as a risk pooling mechanism. The exchange dies in 1997 amid a prolonged soft market.

1985: ACE Ltd. is created by 34 corporate shareholders, Marsh & McLennan Cos. Inc. and Morgan Guaranty Trust Co. to write excess liability and D&O insurance. While originally formed in the Cayman Islands, ACE redomiciles in Bermuda the next year.

1985: Mentor Insurance Co. ordered liquidated, one of several Bermuda captives writing third-party business to cease underwriting.

1986: X.L. Insurance Co. Ltd. is formed in Barbados with the help of M&M and Morgan Guaranty to write lower-level excess liability coverage. The next year, it opens an office in Bermuda.

1986: Corporate Officers & Directors Assurance Ltd. (CODA) is formed to write directors and officers liability insurance for major corporations.

1987: MEDMARC Ltd. is the first Bermuda captive insurer to redomesticate to the United States in the wake of the Risk Retention Act, enacted in 1986.

1988: Centre Reinsurance Holdings Ltd. forms in Bermuda and offers finite risk insurance.

1991: Bermuda has 1,323 registered insurers, writing $13 billion in premium.

1991: Under the weight of losses from the H.S. Weavers line slip in London, Bermuda Fire & Marine Insurance Co. spins off its profitable domestic business into BF&M Ltd. and places its loss-riddled international business into liquidation.

1992: Mid Ocean Reinsurance Co. Ltd. is launched in November, the first of several property catastrophe reinsurance specialists formed in Bermuda after Hurricane Andrew.

1992: Internal Revenue Service says companies can deduct group term life insurance premiums paid to captives because the premiums represent unrelated business.

1995: Electric Mutual Liability Insurance Co., a longtime General Electric Co. general liability insurer, moves to Bermuda at midyear and a few months later declares itself massively underreserved for GE pollution and asbestos claims and insolvent by more than $500 million. EMLICO prevails in massive litigation, including claims by its reinsurers that the insurer and GE planned the collapse to take advantage of favorable Bermuda liquidation laws.

1995: Hopewell is shut down after 23 years when proportional reinsurance is not available.

1995: Bermuda overhauls its insurance law to create four classes of insurance licenses, with varying minimum capital requirements.

1996: Mid Ocean Ltd., LaSalle Re Holdings Ltd., Terra Nova (Bermuda) Holdings Ltd., and ACE Ltd. all invest in Lloyd's of London, making Bermuda insurers and reinsurers some of Lloyd's largest capital providers.

1998: More than a decade after their founding in response to the U.S. liability insurance crisis, ACE and XL open operations in the United States.

1998: Johnson & Higgins and Marsh & McLennan Cos. Inc. merge, making Marsh & McLennan Services (Bermuda) Ltd. Bermuda's largest captive manager.

1998: Creation of Arrow Reinsurance Co. Ltd. by Goldman Sachs & Co. marks first Bermuda reinsurer owned by an investment bank. Arrow Re is followed two months later by Lehman Re Ltd., a reinsurer set up by Lehman Brothers.

1998: Bermuda's Progressive Labor Party wins its first elections, making Jennifer Smith the premier of Bermuda. The PLP's victory comes after 30 years of government by the United Bermuda Party.

1999: ACE transforms itself into a multinational, multiline property casualty insurer and reinsurer with the purchase of CIGNA Corp.'s property/casualty business. XL greatly expands its U.S. involvement through its purchase of NAC Re Corp.

1999: Bermuda ends the year with 1,534 registered insurers, writing gross premiums of more than $27 billion.

1999: PXRE Corp. announces it will redomesticate to Bermuda. Several more reinsurers follow.

2000: A group of U.S. insurers calls on Congress to close a "Bermuda tax loophole" following ACE and XL's expansion into the U.S. and the redomestication of several other U.S.-based insurers and reinsurers to Bermuda.

2000: The Segregated Accounts Companies Act sets rules for segregated-accounts companies, or protected cell companies, and permits registration of such companies.