Labuan sees captive growth in 2018

Labuan saw six new captives licensed in 2018, bringing the total number of captives in the domicile to 48. According to the Labuan International Business And Financial Centre (IBFC) Market Report 2018, 22 insurance and insurance-related entities were approved in 2018, comprising six captives, 13 brokers, two (re)insurers and one underwriting manager, bringing the total number of approved Labuan insurance and insurance-related entities to 216. This includes 80 brokers, 23 managers, 48 captive insurance companies, and 65 insurance/reinsurance companies. Total gross premiums for captive insurance business increased by 11% to $400.5m, from $360.9m in 2017. The engineering sector and other classes of business continued to be the main sectors that contributed to the increase of total gross premiums of captives, with $98.7m and $246.1m respectively. The reports says the reduction of net claims coupled with lower management expenses have resulted in a higher underwriting margin for the captive business. Captive business continued to grow, with more than half of captive insurance premiums coming from international markets, the report notes. In fact, Malaysian captives accounted for $130.7m in total gross premiums, while captives from international markets saw gross premiums of $269.8m in 2018, up from $230.9m in 2017. The report says the low operating cost, robust regulatory framework and wide range of captive solutions are the driving factors for the establishment of captives in the Labuan IBFC. It notes that in 2018, the market saw the entry of a Labuan captive established by a large utility corporation in Malaysia. The report reveals that the distribution of gross premiums of captives in the Labuan IBFC in 2018 was: fire 9.7%, marine 3.7%, engineering 24.6%, motor 0.5%, and other classes 61.4%. The Labuan IBFC is partnering with Swiss Re Corporate Solutions in organising a captive conference in Kuala Lumpur, entitled ‘Adding Confidence to Captives: Managing Volatility via Self Insurance’ on 7 August. Farah Jaafar-Crossby, CEO of Labuan IBFC, said: “We are delighted to partner with Swiss Re Corporate Solutions, one of the world’s leading providers of (re)insurance, and look forward to providing insights on risk management via self-insurance, especially captive insurance. With the ever-changing global challenges and changes, the need for risk management tools such as captives and protected cell companies is on the uptick. This joint conference is aimed at providing a platform to enhance knowledge and understanding among corporates with regards to these structures.” Labuan IBFC explained that while globally, captive insurance growth has been on an upward trajectory, with more than 6,500 captives formed as end of 2017, only 2% of these captives originate from Asia-Pacific, highlighting that the Asian captives market still has significant potential for growth.

Labuan sees captive growth in 2018

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