Labuan’s insurance industry records positive growth

LABUAN: Labuan’s insurance industry recorded positive growth for 2016, with the insurance and reinsurance business registering an increase in gross written premiums of 3.3 per cent to US$1.4 billion.

Bank Negara Malaysia ( BNM) Governor Datuk Muhammad Ibrahim said in an environment of volatile oil prices, the insurers and reinsurers successfully shifted focus from engineering and marine classes that correlate to oil price developments, towards other specialised lines.

He said the Labuan International Business and Financial Centre ( IBFC) recorded an increase in premium retention, reflecting the internal capacity of the island’s insurance industry to underwrite more business, particularly from non-residents which contributed 57.9 per cent to total premiums.

“2016 also recorded the highest

2016 also recorded the highest underwriting margin since 2012 due to higher earned premiums written and lower claims during the year.

underwriting margin since 2012 due to higher earned premiums written and lower claims during the year.

“Overall, the sector remained strong and sound, registering profit before tax that grew significantly by 52.4 per cent to US$ 387.0 million and a margin of solvency, of more than six times above the minimum regulatory requirement,” he added.

Muhammad said this at the presentation and briefing on the Labuan Financial Services Authority Annual Report 2016 yesterdday.

He also said wealth management solutions continued to be offered by Labuan IBFC to meet the needs of high-net-worth individuals in the Asia Pacific, a region of significant wealth creation over the last decade.

“In 2016, there was a 13.2 per cent increase in the establishment of Labuan foundations to 188, of which 78.2 per cent originated from the Asia Pacific region.

“These foundations were established for philanthropic purposes, private wealth preservation and estate planning,” he added.

Muhammad said the number of Labuan leasing companies stood at 383 in 2016.

“However, this sector was affected by the global trend of low oil prices. For the year under review, there was a 20 per cent decline in new leasing companies compared to the previous year and total assets leased declined slightly by 2.3 per cent to US$ 50.6 billion.

Muhammad also said the Global Incentives for Trading programme continued to attract the establishment of Labuan international commodity trading companies ( LITCs), growing by 16.2 per cent to 50 companies.

“In 2016, more were established for the trading of base mineral and refined raw materials instead of petroleum and petroleum-related products for which the LITCs are typically established.

“Total income generated from trading and non-trading activities amounted to US$ 16.5 billion last year,” he added. — Bernama

Datuk Muhammad Ibrahim, BNM Governor