PKF MALTA promotes captives in New York (post Brexit)

Another event was organised on 29th March in New York, with the support of FinanceMalta, Bee Insurance Management and a line of keynote speakers. Again this proved to be an innovative event focused on Malta as a domicile seeking to attract US Companies to host their European Captives. Topics included: how to survive FATCA and CRS, what tax regulations one should look out for when relocating, and finally the advantages Malta offers as a domicile which continues to strengthen its position in Europe as a strong player in the Captive market.

Developed over a decade of continued building of the country’s financial services infrastructure and legal framework, this legislation has made the island more attractive for the operation of Captives. The jewel in the crown is the Protected Cell Companies in Malta. Malta is the only full EU member state that offers PCCs. Malta is also the only EU member state that offers the securitisation cell company structure used for asset-backed financing or insurance linked securities platforms. The insurance market in Europe is certainly experiencing a dramatic change in culture, mainly due to the aftermath of Solvency II and recently challenges on passporting rights which may be forfeited by UK-based captives, a consequence of the Brexit negotiations.

While many captives in Malta are entwined with allocating their resources to complete the QRTs and thematic reviews, a survey carried out in 2015 on the local market shows that 57 per cent of local insurers have been somewhat surprised by the magnitude of additional effort necessary to be compliant for Pillar III relative to the time available. The XBRL converting issue is one of the main factors which contributed to additional difficulty locally in meeting the deadlines. Source (Local Insurance Survey on Solvency II - Day One Reporting and QRT Readiness Questionnaire for Maltese Insurers carried out by PKF Malta). Without any doubt, some of the key advantages of Malta as a democracy include our professional institutions, EU membership, political stability and a good command of the English language.

Malta has managed to prosper, albeit being small, thus affording Captive owners flexibility of full passporting rights and accessibility with a stronger customer focus. At PKF Malta, we pride ourselves on being the right size to provide the right solutions with the right people. This is evidenced in our team of insurance, tax, finance and legal experts who help to comply a company’s feasibility, pre-licensing and licensing process and as well throughout the entity’s on-going operation. We provide value added recommendations and have assisted clients in embedding risk management processes into their day-to-day operations.

It goes without saying that 2016 being the first year of reporting this will be a challenging time for insurers as they get to grips with the Solvency II requirements, and at this juncture PKF Malta is able to provide advice to help insurers and/or start-ups cope with these financial reporting challenges. As service providers, we value the relationship we build with our clients. We believe that by basing a relationship on trust, we can provide clients with the best tailor-made service possible. We endeavour to provide our clients with the right combination of skills, experience, statistical methodologies and programmes to deliver the assurance and support they need. PKF Malta is committed to train its staff to enable them to provide client service of the highest standards.

Professional staff allocated to respective projects are closely involved throughout the assignment and provide a main source of continuity. A number of key experts enable delivery of all the objectives in a timely manner. Licensed by the MFSA to act as an approved auditor to carry out external audits of insurance companies and insurance intermediary companies, PKF Malta works closely with specialised service providers within the local industry to cater for a client’s needs including set-up arrangements.

Being a member firm of PKF International, it also teams with 400 overseas offices to deliver specialised technical solutions (including actuarial services) to the local insurance industry. It is worth noting that in the UK there is a plateauing effect experienced by the Captive market, which is partly attributed to a soft market. Another challenge is the onset of Solvency II for smaller insurance units as they go through a slow learning curve. However the benefits of this regulatory reform are starting to be felt within the market and undoubtedly there is a window of opportunity to refocus again on market development.

Recent articles in the insurance media are also characterized with topics on uncertainties linked to Brexit talks and unforeseen ramifications.

In conclusion, PKF Malta believes in the potential growth of the US captive owners who target European risks. For example, it has become a poignant need for multinationals with operations in Europe to insure their Employee Benefits through Captives. Certainly in the past this was a rather difficult task which however is becoming more possible than ever, reaping the full benefits of passporting rights to set up captives domiciled anywhere in EU.

Try Malta – it provides a perfect fit.

Danielle Hermansen, ACII Chartered Insurance Risk Manager, Mgt (Maastricht), is a director at PKF. She has been in the insurance industry for 15 years, working both as an underwriter and a broker, specializing in commercial business. She has more recently worked in the Captive insurance management industry