Malta boasts many advantages as a domicile for captive insurance, with many dedicated, talented and successful companies to hold testament to this. PKF Malta’s team can assist clients throughout the process of registering and licensing a Captive, (Re) Insurance Company or PCC, together with the provision of related services. PKF Assurance (Malta) Limited is licensed by the MFSA as an approved auditor for carrying out Insurance and Insurance Intermediaries External Audits.
PKF Malta has an insurance team providing specialised services to the insurance industry. It works closely with specialised service providers within the local industry to cater for your needs. Being an integrated member firm of PKF Group, it also works closely with international offices to deliver specialised technical solutions to the local insurance industry.
Take a look at our extensive PKF Malta Captive Insurance Brochure
Our Services include:
- Audit – Approved as an Insurance and Insurance Intermediaries Auditor by the MFSA
- Internal Audit
- Setup: Initial information meeting with prospective applicants
- Feasibility studies
- Incorporation and registration of insurance / captive / PCC companies
- Setting up the initial introductory meeting with the Regulator and follow up meetings
- Preparation and submission of the application for authorization by the MFSA in liaison with any required entity, and the preparation of the three year financial projections,
- Assistance in the search and selection of service provider for outsourced functions, including; Insurance Managers, Actuaries, Risk Managers, Compliance Officers, Company Secretary, Money Laundering Reporting Officers, Claims Handlers, Reinsurers, IT Suppliers, and other service providers as required,
- Post application support to respond to any queries from the MFSA arising from the application submission,
- Provision of either the external or internal audit service
- Due Diligence on third parties pre-contract
We know the laws, we know the market, and, especially when it comes to the multitude of advantages a PCC can offer you, we know how to make this structure work. PKF’s advice is tailored to each client, going beyond mere compliance to incorporate a whole range of flexible services. It’s a long-term commitment we make to you – to stand by you through the smooth and turbulent times.
Why locate to Malta?
- Malta is an EU member state. According to the “free movement of services,” this guarantees access to all European Markets. Located in the Mediterranean Sea, it is a suitable base amidst the EU, North Africa, and the Middle East. It is an independent democratic state with a history of political stability and offers a very attractive tax system.
- Malta is also supported by an established Financial Services centre of international repute with highly skilled and experienced professional expertise. The 70+ double tax treaties in place following the OECD Model Convention, facilitate the exchange of information, collaboration, and co-operation between the respective authorities.
- Having so many high profiled foreign companies domiciled in Malta is proof that Malta has an interesting future as a financial centre, as a secondary residence as well as for company administration for the re-domiciliation of companies.
- As an EU member state and EIOPA member, Malta has continually contributed to the development of Solvency II, and its expertise has grown thanks to the open dialogue PCC’s and insurance management companies have had with the local one-stop-shop Authority (MFSA).
- In addition, clear-cut legislation facilitates the re-domiciliation of insurance and reinsurance companies and/or captives in Malta without the need to be wound up or reincorporated. Setting up and running these companies in Malta is reputed to be on average 60% less compared to other EU jurisdictions. An insurance vehicle domiciled in Malta can provide cover for risks across the entire EU by virtue of the EEA freedom of passporting to write insurance directly without the need of a fronter.
- Most captives/insurers take advantage of the EEA freedom of passporting to write insurance directly without the need of a frontier. Typically, a non-EU captive would use a licensed insurance company as the frontier, to write business in the EU and the captive will then reinsure the fronter. However, this has its disadvantages. There are no general guidelines in EU domiciles that limits or controls the amount and type of collateral that must be provided to a fronting insurance company. This collateral is trapped money which may be utilised elsewhere, so many do find that the cost of setting up a cell in an EU domicile would be more competitive, whilst ensuring full control of it as a risk management tool and using the same company as their fronter and reinsure back.
- Malta can be said to have a firm advantage for insurance companies because it enjoys the enviable position as the only full EU member to provide Protected Cell Companies, Cells that do not suffer additional financial costs associated with both establishing and running of an insurance vehicle. The island is fully equipped to cater for PCC structures, since we have been the forerunners and only full EU member to have legislated these structures in the Solvency II arena in Europe, and one might add will continue to introduce innovative products in the near future. The PCC concept has also been taken further to include insurance intermediaries and now SCC (Securitisation Cell Companies).
- The main advantage one may note for a Cell within a PCC, which makes it attractive to small to medium-sized companies, is the need for a lower capital requirement. This in comparison to setting up a standalone captive or insurance company. Each Cell is obliged to have capital relative solely to its risks, while the minimum capital requirements (MCR) will apply to the PCC as a whole. The MCR being the minimum level below which the number of financial resources should not fall.
- Insurance Captives and Insurance Managers that establish their operations in Malta benefit extensively from a low-cost base, both in terms of a workforce that is highly specialised and professional, as well as in terms of the cost facilities, such as office premises and maintenance.
- One will also find the added benefit of operating within a recognised OECD (Organisation for Economic Co-operation and Development) tax environment. Moreover, supporting our tax regime are many attractive and wholly compatible double tax treaties as well as other methods of relieving double taxation on cross border transactions.
Protected Cell Companies
- A PCC is applicable to all licensed: insurance companies; reinsurance and affiliated insurance companies; insurance managers and insurance brokers.
- A PCC creates within itself one or more cells for the purpose of segregating and protecting the cellular assets. This implies that the creditors of a particular cell have no recourse against the assets or other cells within the PCC. However, the PCC, with its cellular and non-cellular components, is a single legal entity.
- Malta is the first European Union member state to adapt cell structures available for insurance linked securities transactions. The Malta Insurance – Linked Securitisation framework encapsulates the Reinsurance Special Purpose Vehicle Regulations & Securitisation Cell Companies Regulations. Insurance-linked securitization as differentiated from the traditional securitization, wherein the risk transferred is not credit risk, but the risk of the insurer having to make payments as a result of claims arising from catastrophic events. Not all the risk is transferred.
- A securitisation cell company (SCC) is an insurance linked securities platform for private collateralised reinsurance transactions. An SCC is a single legal entity that can establish one or more segregated cells for the purpose of entering into securitisation transactions. It is a platform structure that offers low costs and quicker set-up time for each transaction. An SCC would be authorised as Reinsurance Special Purpose Vehicle (RSPV) under the Maltese RSPVs Regulations and must be fully compliant with the EU Solvency II Regime.
- The Securitisation Cell Companies regulation provides the legal framework for the establishment of an SCC, a single legal entity fully compliant with the EU Solvency II regime. Each cell may have a different base currency and issue securities in multiple currencies.
Navigating Brexit – Insurance cells in Malta
Aimed at: Brokers and Insurers
Venue: British Banker’s Association – London
Time: 8:30am – 9:45am
With brokers, MGAs, insurers, and captives responding to the considerable uncertainty surrounding the UK’s departure from the EU by looking at options for overseas locations, PKF Littlejohn held a breakfast seminar exploring possible post-Brexit strategies, with a particular focus on Malta. The seminar was led by Mr Neil Coulson, a partner in PKF Littlejohn’s insurance team; Mr Kenneth Farrugia, Chairman of Finance Malta; Michael Whitfield of Building Block PCC; and Ms Danielle Hermansen from PKF Malta.
The seminar was particularly relevant to brokers and insurers considering establishing new operations within the EU. It discussed what one should consider when evaluating the need for and location of a separate EU operation. The session focussed on why Malta might be a suitable location in which to establish an EU insurance intermediary or carrier operation. It was discussed how insurance intermediaries – including those considering setting up an insurance carrier – could utilise a ‘protected cell’ arrangement to guarantee their future access to EU markets post-Brexit. The session provided some practical suggestions with a panel Q&A. Delegates had an opportunity to meet with the presenters on a one-on-one basis.
Malta – Europe Insurance Domicile for US firms
New York Captive Owners Summit | 31 October 2016 | Essex House | New York City
PKF participated in a follow-up event that took place at the end of October 2016 in New York – ‘Captive Owners Summit’. This time it had a different setup, meeting with captive owners in a more intimate setting under the prestigious hosting capabilities of Captive Review. PKF Malta, with the support of FinanceMalta, Bee Insurance Management and a line of esteemed speakers, had hosted an event in New York on 29 March 2016, to promote Captive Insurance opportunities for the US market. This event was one of a series of events in the PKF Malta calendar with the aim of promoting Malta as a domicile of choice.
This was the first initiative of its kind organized by a Maltese contingent in New York as a Malta specific event. This Insurance Summit had the aim of encouraging US Companies to host their European Captives in Malta, by explaining what it entails, how to survive FATCA and CRS, what they should look out for, and finally the advantages Malta offers. PKF Malta thinks it is important to maintain momentum and decided to attend a Captive Owners Summit organised by Captive Review in New York to further promote Malta’s unique benefits in October 2016.
FinanceMalta being at the forefront to stimulate investment thinks this initiative helps Malta remain a compelling proposition for prospective investors seeking to establish or extend their footprint in Europe. The New York Captive Owners Summit is a highly exclusive learning and networking event tailored for captive America’s leading captive owners.
Europe – Insurance and Investments opportunities for US firms
Venue: The Bar Association in New York
Date: 29th March 2016
Time: 9am to 2pm
Take a look at our extensive PKF Malta Captive Insurance Brochure
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