In a post-Solvency II world and against the backdrop of the UK’s leaving the EU, Malta can offer companies a robust regulatory regime, access to Europe and innovative structures such as protected cell companies and ILS, Penny Hudson at Artex Risk Solutions tells Monte Carlo Today.
The attraction and benefits of Malta as a domicile are already established, although the jurisdiction is seeing potential enhancement due to the UK’s planned exit from the European Union as it will reap the rewards of its own EU membership and sustained investment in its regulatory regime, infrastructure and education system needed to support its fast-growing financial services sector.
That is the view of Penny Hudson, director and head of the Malta office at Artex Risk Solutions, the specialist in insurance management and alternative risk programmes.
Hudson says that Malta was already well placed as a domicile thanks to its Solvency II compliance and membership of the EU. But, post Brexit, more companies are considering using the domicile as an entry point into Europe to write pan-European business either directly or by using fronting structures based or being established in Malta.
“Malta is an independent state within the EU with a long track record in insurance,” Hudson says. “There are a number of established insurance companies already here and we are seeing additional interest since the UK’s vote to leave Europe. We have a very deep historical link to the UK so Malta is a natural choice for UK and other non-EU companies now considering their options post Brexit.”
Malta is set to hold the presidency of the EU from January 2017 meaning it will be deeply involved with the negotiations from within the EU, with the UK, around the terms of its exit from the union. The Malta government has also intimated that if the worst-case scenario were to materialise and there was no agreement forthcoming with the EU, then Malta, like a number of other existing EU countries, would consider discussing a bilateral agreement.
Direct writing facility and captives growth
Malta has been enjoying steady growth, says Hudson. The domicile boasts a growing captives and insurance industry sector as a whole, which has been enhanced in recent years by the introduction of legislation that enables the use of protected cell companies (PCCs), an increasingly popular tool for companies wanting to write third party business, together with other products such as insurance-linked securities (ILS).
Hudson says she has seen enhanced interest in using protected cells from brokers and managing general agents.
“Where companies are responsible for a portfolio of well controlled, low risk business, they are increasingly interested in taking that risk themselves as opposed to simply acting as an intermediary,” she says.
“A protected cell structure offers a very efficient way of doing that, and it also works well under the Solvency II regime.”
Hudson adds that she has seen portfolios of business covering a variety of risks ranging from health insurance to travel insurance to pet insurance established in Malta in recent years for this reason.
“Malta has a robust community of professionals in the form of lawyers, accountants and insurance specialists such as Artex who are able to work on such transactions. It also has vast experience in its regulator which is responsive and flexible to the needs of the market.
“The country has invested heavily in its infrastructure and education systems in recent years to ensure the long-term sustainability of the sector. The local university is well respected and there is good access to training here, meaning companies don’t need to bring the talent in,” she says.
“The regulator is very switched on and totally up to date with Solvency II requirements. The team there encourage meeting with companies new to Malta and offer selected guidance with their planning and application process.”
The business language on Malta is English, which helps UK companies seeking a platform from which to operate in Europe, as well as an efficient tax system which benefits insurers operating from there. Another advantage is that because this EU jurisdiction is smaller than others, there tends to be a reduced amount of red tape, so information for new applications can flow more quickly.
Artex is a facilitator for companies looking at using Malta either for fronting arrangements, captives or PCCs, or as a means of writing pan-European business—post Brexit or not.
“We have a strong team here well versed in the challenges of getting all these arrangements up and running efficiently in the Solvency II world,” Hudson says.
Penny Hudson is director and head of the Malta office of Artex Risk Solutions. She can be contacted at: firstname.lastname@example.org
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