Local legislation stipulates that the MFSA may authorise a company whose head office is in Malta to carry on business in or from Malta in terms of either direct insurance business or reinsurance business, or for both reinsurance and direct business, or by means of an affiliated insurance business (which could be either direct, or reinsurance, or both).
The same legislation also lays down that an insurance company may be established as a Protected Cell Company (PCC) or an Incorporated Cell Company (ICC). In every case, the classes of business which the company is authorised to operate will be specified in the authorisation document presented by the MFSA.
Setting Up an Insurance / Reinsurance Company
Malta’s entry into the European Union transformed Malta’s insurance industry. Although the market has, since then, been primarily served by local insurance companies, several international insurance/reinsurance companies and captives have set up shop in Malta to passport to other European countries. These companies have benefitted from the several advantages the islands offer in this respect, including the presence of a knowledgeable and accessible regulator in the form of the MFSA, the possibility of direct passporting to other European countries, and a favourable tax system. Moreover, Malta offers a lower operational cost base when compared to other EU domiciles. The islands also boast an excellent telecommunications infrastructure and easy airline access to and from major gateways in Europe and beyond.
Malta’s reputation as a robust financial centre stems from a legislative framework which has also seen fit to cater for the creation of, or conversion to, a Protected Cell Company (PCC) or Incorporated Cell Company (ICC). Migration legislation also facilitates entrance into and exit from the islands, a process known as re-domiciliation. Meanwhile, regulated insurance managers such as Bee are on hand to offer insurance back-office functions and other services to insurance companies licensed to operate from Malta. Additionally, incorporating a Maltese insurance/reinsurance company continues to enhance Malta’s already established name in the international insurance domicile.
Malta is a very stable country both in terms of financial strength and legislation. Entry into Malta is very straightforward with an efficient licensing process. The MFSA has up to six months from the date of application to process an application for an insurance licence, and up to three months to licence a reinsurance company.
For a detailed explanation of the process and requirements for setting up an insurance/reinsurance company in Malta, kindly get in touch.
Helping you set up a shop in Malta
Bee Insurance Management is yet another reason why setting up shop in Malta could form part of your plans. Our wide spectrum of services covers an array of functions, ranging from the preparation of feasibility studies and business plans, to licensing, company incorporation and registered office services. From an operational perspective, we are in a position to provide underwriting and reinsurance, cover the handling of claims, as well as carry out investment reporting, compliance and risk management. You can also outsource to us your non-core functions, such as accounting and cash management, company secretarial, HR, and administration. Moreover, we are in a position to provide bespoke tailor-made services.
Our team of qualified professionals is committed to delivering quality service, and we bind ourselves to assign a member of our team to be your primary point of reference. This executive will monitor your company’s operational activity, document procedures and policies, and investigate and resolve all client queries in a timely manner.
Bee & the Application Process
Once you decide that Malta could be the right location for your insurance undertaking, we can organise, and accompany you to, a preliminary meeting at the offices of the Malta Financial Services Authority (MFSA) to discuss your proposed operations. At this stage, the MFSA will provide an initial indication of whether you should proceed with submitting the formal application or whether it would require amendments to the proposed operational structure for it to consider the application.
Once the MFSA gives you the green light to proceed with the application, we will be in a position to assist you throughout the various stages of the necessarily lengthy process related to the compilation of the documentation required. You might also want to tap into our experience and expertise in guiding you on capital requirements, components of own funds, acceptable assets, and how best to distribute them for solvency purposes. Due to our specialisation in this jurisdiction, we can also recommend suitable individuals as independent non-executive directors on the Company’s Board of Directors. Our support could include tasks such as issuing a Report to the MFSA accompanying the Scheme of Operations as required by the Authority, as well as assisting in formulating replies to MFSA queries following submission of the application. Moreover, we can give our recommendations as to the appointment of bankers, legal advisors, statutory auditors and other professionals, as required. We can also provide assistance in the formation of the company with the Malta Registrar of Companies.
Setting Up A Captive
A captive is an insurance company created and wholly-owned by one or more non-insurance companies to insure the risks of its owner, or owners. Captives are essentially a form of self-insurance whereby the insurer is owned wholly by the insured. They are typically established to meet the risk-management needs of the owners or members.
Setting Up A PCC (Protected Cell Company)
Although PCC legislation has existed in several domiciles since 1997, Malta is the only EU member state which has legislated for the existence of PCCs, in 2004. In this regard, local regulations stipulate that companies may be authorised to carry on insurance business – which encompasses insurance, reinsurance and any affiliated business – as well as the functions of insurance brokers and insurance managers.
Setting Up An ICC (Incorporated Cell Company)
AlthThe introduction of Incorporated Cell Company (ICC) regulations in 2010 followed on the enactment of Protected Cell Company (PCC) regulations in 2004. The difference between the two is that the each incorporated cell of an ICC has its own legal identity, and is a separate legal entity. This means that assets and liabilities are attributed either to the cell company itself, or to a particular separate cell of the ICC.
Setting Up a Captive
A captive is an insurance company created and wholly-owned by one or more non-insurance companies to insure the risks of its owner, or owners. Captives are essentially a form of self-insurance whereby the insurer is owned wholly by the insured. They are typically established to meet the risk-management needs of the owners or members. Captives are formed to cover a wide range of risks, and practically every risk underwritten by a commercial insurer can be provided by a captive. The type of entity forming a captive can vary from major multinational corporations — the vast majority of Fortune 500 companies have captive subsidiaries — to non-profit organisations. Once established, the captive operates like any commercial insurance company and is subject to regulatory requirements, including reporting, and capital and reserve requirements.
In order to carry out captive/affiliated insurance business in Malta, one has to submit an application, in writing, to the Authorisations Unit at the MFSA. To be eligible, one has to adhere to minimum requirements which are subject to company specific solvency considerations, namely the level of business written and the overall claims experience of the Company. Such considerations could dictate a higher capital requirement. Other capital requirements also apply for combined insurance and reinsurance captives.
Value of Own Funds Requirements
General Business
€3.7m or €2.5m if liability classes are excluded
Long-term Business
€3.7m
Business of Reinsurance
€3.6m (pure) or €1.2 (captive reinsurer)
Valuation of assets and liabilities, technical provisions, own funds, solvency capital requirement, minimum capital requirements and investment rules chapter 5
Once authorised, legislation places certain obligations on the captive. These include financial requirements, such as maintaining a margin of solvency, and technical provisions that are backed up at all times by unencumbered assets. Moreover, audited accounts are to be submitted to the Regulator within six months from the end of the financial year. These are to be accompanied by Business of Insurance Statements. An actuarial report is also required in the case of long term business.
Once you engage us as your insurance managers, we can assist and advise you on the way forward with regard to the setting up of your captive. We will do so in terms of assessing the feasibility of the project, and formulating the captive’s business strategy. We will do this by providing a series of pre-incorporation services, as well as by undertaking the actual incorporation and subsequent annual services.
For a detailed explanation of the process and requirements for setting up a Captive in Malta, kindly get in touch.
Setting up a PCC (Protected Cell Company)
Although PCC legislation has existed in several domiciles since 1997, Malta is the only EU member state which has legislated for the existence of PCCs, in 2004. In this regard, local regulations stipulate that companies may be authorised to carry on insurance business – which encompasses insurance, reinsurance and any affiliated business – as well as the functions of insurance brokers and insurance managers. Moreover, the regulations also give the option for a company to be formed or constituted as a cell company to carry on insurance business, or for a company providing insurance business to convert into a cell company, as long as it is authorised to do so by its Memorandum and Articles of Association.
As far as the local scenario is concerned, Maltese legislation has established that insurance business considered by cells within PCCs can include fronting facilities, direct selling to third parties, insurance or reinsurance captives, reinsurance facilities, insurance management cells, as well as insurance broking facilities.
In order to set up a PCC in Malta, one has to submit the appropriate application, in writing, to the Authorisations Unit at the MFSA. This process occurs in two stages. Initially, the Company would apply for authorisation to operate as a PCC. Subsequently, it would need to seek approval for each respective cell. Because of the nature of a PCC, the due diligence process is particularly rigorous.
The local Regulator places no limitation as to the class of insurance business that can be written. Nevertheless, the same restrictions that apply for insurance companies also apply for PCCs. Since the PCC is one legal entity which has one authorised license, life and non-life business cannot be carried out by one PCC. This means that the company structure cannot have one cell doing life business and another cell doing non-life.
Eligibility to set up a PCC is subject to the adherence to minimum requirements linked to company specific solvency considerations, namely the level of business written and the overall claims experience of the company. Such considerations could dictate a higher capital requirement. Other capital requirements also apply for combined insurance and reinsurance undertakings.
Value of Own Funds Requirements
PCC Capital Requirements
General Business
€3.7m or €2.5m depending on the class of business
Long-term Business
€3.7m
Reinsurance
€3.6m pure reinsurer or €1.2m Captive reinsurer
Cell Capital Requirements
€3.7m
Business of Reinsurance
Rule of thumb is 18% of premiums written plus a 50% buffer.
We can assist you by advising as to the best model to adapt in this regard, as local legislation presents the following scenarios:
- A company desirous of applying for authorisation to carry on business of insurance under the PCC regime;
- A company authorised under the Insurance Companies Act desirous to apply for authorisation to convert into a PCC ;
- An authorised PCC desirous of applying for the approval of a protected cell.
Our wide spectrum of services covers an array of functions. At the initial stage, we can prepare the necessary feasibility and target market studies, as well as the relevant business plans. We can also advise you as to the viability of renting out cells to other investors, as opposed to being a stand-alone company. Moreover, we will provide any required licensing, company/cell incorporation and registered office services.
From an operational perspective, we are in a position to provide underwriting and reinsurance, cover the handling of claims, as well as carry out investment reporting, compliance and risk management. You can also outsource to us your non-core functions, such as accounting and cash management, company secretarial, HR, and administration. Moreover, we are in a position to consider and provide bespoke tailor made services.
Our team of qualified professionals is committed to delivering quality service, and we bind ourselves to assign a member of our team to be your primary point of reference. This executive will monitor your company’s operational activity, document procedures and policies, and investigate and resolve all client queries in a timely manner. For a detailed explanation of the process and requirements for setting up a PCC in Malta, kindly get in touch.
Setting up an ICC (Incorporated Cell Company)
The introduction of Incorporated Cell Company (ICC) regulations in 2010 followed on the enactment of Protected Cell Company (PCC) regulations in 2004. The difference between the two is that the each incorporated cell of an ICC has its own legal identity, and is a separate legal entity. This means that assets and liabilities are attributed either to the cell company itself, or to a particular separate cell of the ICC. The cell company and its cells may conduct business of insurance and reinsurance as principals, captives, insurance brokers and insurance management companies in respect of general and long term business.
In order to set up an ICC in Malta, one has to submit an application, in writing, to the Authorisations Unit of the MFSA. To be eligible, one has to adhere to minimum requirements which are subject to company specific solvency considerations, namely the level of business written and the overall claims experience of the company. Such considerations could dictate a higher capital requirement. Other capital requirements also apply for combined insurance and reinsurance undertakings.
Value of Own Funds Requirements
General Business
€3.7m or €2.5m if liability classes are excluded
Long-term Business
€3.7m
Business of Reinsurance
€3.4m (pure) or €1.2 (captive)
We can assist you by advising as to the best model to adapt in this regard, as local legislation presents the following scenarios:
- A company authorised under the Act desirous of applying for authorisation to transform into an incorporated cell company or an incorporated cell;
- A protected cell company authorised under the Act, having no protected cells desirous of applying for approval of a transformation into an incorporated cell company;
- A protected cell company authorised under the Act, having one or more protected cells desirous of applying for approval of a division into an incorporated cell company and one or more incorporated cells;
- An incorporated cell company authorised under the Act, but having no incorporated cells, that desires to apply for approval for a transformation into a protected cell company;
- A company desirous of applying for authorisation as an incorporated cell in an incorporated cell company authorised under the Act;
- An incorporated cell company or an incorporated cell for approval for transformation into a non-cellular company.
Our wide spectrum of services covers an array of functions, ranging from the preparation of feasibility studies and business plans, to licensing, company incorporation and registered office services. From an operational perspective, we are in a position to provide underwriting and reinsurance, cover the handling of claims, as well as carry out investment reporting, compliance and risk management. You can also outsource to us your non-core functions, such as accounting and cash management, company secretarial, HR, and administration. Moreover, we are in a position to provide bespoke tailor made services.
Our team of qualified professionals is committed to delivering quality service, and we bind ourselves to assign a member of our team to be your primary point of reference. This executive will monitor your company’s operational activity, document procedures and policies, and investigate and resolve all client queries in a timely manner. For a detailed explanation of the process and requirements for setting up an ICC in Malta, kindly get in touch