TRY...CATCH Block Not Working Properly

Can someone please help me figure out why this trigger causes a "Timeout expired" error after the first try? What I'm trying to do is create an incrementing default value for the projectid field. I have a unique index on the field and for some reason, the INSERT statement won't run inside the TRY block, even though the WHILE loop creates a unique id. It's acting like the loop isn't incrementing, but the PRINT statements prove that the loop does work, but the INSERT statement doesn't work after a succesful first try (i.e. NEWPROJ-1 is inserted correctlly). Anyways, any help would be appreciated.





Code Snippet
GO
/****** Object: Trigger [Projects].[CreateID] Script Date: 05/25/2008 14:16:32 ******/
SET ANSI_NULLS ON
GO
SET QUOTED_IDENTIFIER ON
GO

ALTER TRIGGER [Projects].[CreateID]
ON [Projects].[tblProjects]
INSTEAD OF INSERT
AS
DECLARE @projectid varchar(25)
DECLARE @projectname varchar(100)
DECLARE @projectepskey int
DECLARE @maxcount int
SELECT @maxcount = 1

BEGIN
SET NOCOUNT ON;
SELECT @projectname = projectname
FROM inserted
SELECT @projectepskey = projectepskey
FROM inserted

SELECT projectid
FROM Projects.tblProjects
WHERE (projectid = 'NEWPROJ')

IF (@@RowCount = 0)
BEGIN
SELECT @projectid = 'NEWPROJ'
INSERT INTO Projects.tblProjects(projectepskey, projectid, projectname)
VALUES
(@projectepskey, @projectid, @projectname)
END
ELSE
BEGIN
WHILE @maxcount >= 1
BEGIN

BEGIN TRY
SELECT @projectid = 'NEWPROJ-' + CONVERT(varchar, @maxcount)
PRINT @projectid
INSERT INTO Projects.tblProjects(projectepskey, projectid, projectname)
VALUES
(@projectepskey, @projectid, @projectname)
BREAK
END TRY
BEGIN CATCH
SELECT @maxcount = @maxcount + 1
PRINT CONVERT(varchar, @maxcount)
CONTINUE
END CATCH;
END
END
END