Financial Services in Malta

Stockholm – 5th October 2011

Overview

Currency: Euro (€)

EU Member: May 2004

Unemployment Rate: 6.4% (June 2011) – EU 10%

GDP growth: 2.5% (anticipated 2011)

Inflation: 2.3% (August 2011)

Economic sectors: Services (73%) Industry (24%)

Agriculture (3%)

Main trading partners: Italy, Germany, UK

Sovereign rating: A2 (Moody’s – Sept 2011)

Key Facts

Licensed Insurance operators

Currently 14 licensed insurance managers including

the major international players

Currently 7 licensed PCCs, of which 3 write business

through the Core, and which operate 16 cells writing

business in and outside of Malta.

Currently 28 insurance companies licensed in Malta

but operating outside of Malta

Currently 10 licensed Captive insurance and

reinsurance companies

Licensed Insurance operators

Of these 37 are fully or partly managed by insurance

managers

12 are fully or partly self managed

The cells are all managed by insurance managers

Total premium volumes for 2010 were €923million

Some large names: BMW, Vodafone, Renault, Peugot,

Munich Re to name a few

Insurance Regulations•

• The Insurance Business Act, 1998 and the variousRegulations and Directives issued in terms of the Act

• Insurance Business (Companies Carrying on Business ofAffiliated Insurance) Regulations, 2003 makes specificprovisions for captive companies;

• MFSA Insurance Rule 21 of 2003 on Business of AffiliatedInsurance determines the risk that may be insured bycaptive companies;

Insurance Regulations•

• Insurance Business (Continuance of Companies carrying onBusiness of Insurance) Regulations, 2003 governs theredomiciliation process for insurance companies.

• The Companies Act (Cell Companies Carrying on Business ofInsurance) Regulations, 2004 and 2010 provide theregulatory regime for Protected Cell Companies (PCCs)and Incorporated Cell Companies (ICCs).

Minimum Capital: €2.3m but €3.5m in respect of Life,

Liability, Credit & Guarantee classes, Reinsurance captives

€1.1m

Own Funds: the components making up the own funds

must consist of:

• at least 50% as paid up share capital

• the remaining 50% can be a mixture of reserves, share

capital (including preference shares), subordinated loans

and retained profits

Insurance Regulations

Insurance Regulations

The Insurance licence holder must meet the following

criteria on an on-going basis:

• Fit and proper criteria

• Sound and prudent management

• Financial soundness;

Insurance Regulations

Other criteria to be met are:

• Own funds

• Margin of Solvency

• Technical Provisions

• Minimum guarantee fund

• Submission of annual audited accounts

• Adherence to Prevention of Money Laundering

Act

Solvency: Currently in accordance with EU Solvency I

Directive, higher of MGF and 18% (27% in the case of liability

business) of premium written or 26% (39% in the case of

liability business) of claims incurred over a rolling 3 year

period. Companies can take credit for reinsurance when

calculating their RMM (up to 50%).

The MFSA currently requires a buffer of 150% over the RMM

where the RMM is higher than the MGF

Insurance Regulations

Reserves: Insurance companies are required to maintain

adequate technical provisions covered at all times by

equivalent admissible assets

Taxation: Insurance companies are subject to the normal

corporate tax rate of 35%. However under the Maltese

imputation system, on distribution of dividends, the

shareholder is entitled to a 6/7th refund of the tax paid by

the company.

Insurance Regulations

Benefits

• Passporting rights to carry on life and non-life insurance

and reinsurance business in other EU/EEA member

states;

• Knowledgeable and accessible regulatory body;

• Comparatively lower costs;

• Experienced professional workforce

• Excellent telecommunications infrastructure;

• Efficient application and approval process;

• PCC/ICC/Migration legislation;

Benefits

• Favorable tax system approved by the EU (on the

OECD White List) including a network of over 50

double tax treaties;

• Availability of regulated insurance managers to

outsource insurance back-office functions;

• No entrance or exit barriers

Benefits

Insurance Managers

• Workforce experienced in insurance business –

underwriting, claims handling, accounting, Regulatory

matters

• Very good working relationship with the MFSA

• Opens doors in doing business in Malta

• Cost efficient

• Economies of scale

Benefits

Target Market and feasibility Studies

• Regulatory environment

• Market specific analysis

• Penetration option analysis

• Feasibility studies

• Business plans

Services

Captive Feasibility Studies

• Business strategy

• Assess risks

• Limits and risk appetite

• Assess reinsurance needs

• Cost benefit analysis

• Tax analysis

Services

• Licensing and Company registration

• Underwriting, claims handling, reinsurance reporting

• Accounting and Finance

• Company Secretariat

• Compliance/MLRO

• Risk Management

• Solvency II

• Administration

Services

THANK YOU

www.bee.com.mtwww.mima-malta.com