The setting up of captive insurance companies in Malta : an evaluation

Abstract

Captive insurance companies have been in operation since the 1920s and have been growing sustainably throughout the years, especially following the enlargement of groups due to globalisation. This study aims to evaluate the financial and other aspects of the Maltese jurisdiction when setting up a captive insurance, which in Maltese legislation, is referred to as "Affiliated Insurance Company". Prior to the evaluation of the Maltese aspects it is necessary to understand and determine the captive characteristics in general. Since joining the European Union, Malta experienced its first captive set-ups together with the registration of renowned international insurance managers. Substantial emphasis has been places on this sector in order to attract captive companies, especially due to Malta's growing reputation as a viable financial services centre in Europe. This also includes the concept of the Protected Cell Companies (PCC) which is a special type of captive insurance, whereby the operation of each captive member is segregated into separate cells. Both local and other European scenarios were considered in order to determine where Malta stands. In order to carry out this study, reference to European legislation as well as local legislation was necessary. Some issues were also substantiated by email correspondence with foreign regulators and international captive management companies. On the other hand, the local scenario was based on research through local publications and also by personal interviews with several experts on this subject.