AUGUSTA, Maine—Gov. John E. Baldacci has signed a measure modernizing the state's captive insurance statute, which Maine officials hope will spark development of the captive insurance industry in the state.

Maine has had a captive law since 1997, though it has no captives, a fact Maine Sen. Justin Alfond, D-Portland, who sponsored the captive modernization bill, attributed to the state's original captive law being overly restrictive.

Among other things, the measure signed Tuesday eliminates Maine's captive premium tax, expands the definition of association captives, and allows the formation of sponsored and branch captives. The modernization legislation also eases restrictions on the investment of captive assets by pure captives.

The measure, L.D. 1436, though, increases minimum capital and surplus requirements for pure captives to $250,000 from $100,000, for association captives to $750,000 from $400,000 and for industrial insured captives to $500,000 from $200,000. Minimum capital and surplus was set at $500,000 for sponsored captives and $1 million for risk retention groups.