Over the past decade, Malta’s insurance sector has been on a transformative path. Now, more than ever, it’s crucial for the industry to focus on growth, operational efficiency, and customer satisfaction while navigating the disruptive forces that are becoming commonplace.
Captive insurance serves as a strategic tool for risk management, allowing organisations to take charge of their insurance needs by setting up their own insurance or reinsurance entities. This approach provides custom coverage, cost savings, and improved risk management, enabling companies to tackle specific risks that traditional insurers may not cover. The benefits of captive insurance include managing insurance expenses, actively reducing risks, and accessing reinsurance markets, which together foster more predictable and stable risk management strategies.
In the realm of captive insurance, beyond the traditional standalone re/insurance captive setups, the Protected Cell Company (PCC) structure has emerged as a flexible and adaptable framework.
Why choose Malta?
A thriving EU hub for aptive domicile
Since joining the EU and Eurozone, Malta has emerged as a key player in the captive insurance sector. This success is built on a solid regulatory framework, a proactive financial services regulator, and a cost-effective base within the EU. Plus, Malta boasts skilled professionals ready to support the full range of captive services.
A legal framework that supports captives
Malta stands out as the only EU country with Protected Cell Company (PCC) legislation, alongside traditional structures. This allows insurance firms to createseparate cells within their legal entity, effectively managing risks across various captives, business lines, or policies. The PCC model is cost-efficient, thanks to shared governance, risk management, and reporting, while also lowering capital requirements.
PCC legal considerations
While Maltese PCC legislation permits insurance firms to organise their structures into cells, it’s crucial to view a PCC as a single legal entity from a legal (non-tax) standpoint. Each cell, along with the core entity holding non-cellular assets, is treated as a separate "company”. This means each cell is typically subject to Maltese income tax under the standard tax rules for companies.
Tax legislation
Malta’s tax legislations present a compelling and competitive framework. In our interconnected global economy, cross-border transactions can lead to tax implications. Malta has established over 80 double taxation treaties to manage income taxation between two states and prevent double taxation. This creates an appealing income tax environment for captives and other insurance entities.
Accounting considerations
While IFRS 17 has been introduced for insurance companies adopting IFRS in Malta, new local regulations have emerged to guide accounting principles for specific insurance undertakings, including captive (re)insurance entities. These regulations offer captive undertakings the choice to follow General Accounting Principles for Eligible Entities (GAPEE), a local accounting framework, instead of adopting IFRS 17.
Capital requirements
Insurers must adhere to Solvency II, but capital requirements can be reduced for PCCs, allowing capital to be refined well below the thresholds needed for a standalone insurer, based on the size and risk profile.
Insurance specialism
Malta, a small island in the Mediterranean, offers a multilingual and well-educated workforce. English is the default business language, and the island just a short flight from many European capitals. Malta also has a strong pool of professionals with insurance-specific knowledge and qualifications, supported by a significant presence of professional services firms with expertise in the insurance sector.
How can we help?
At PwC Malta, we’re proud to be a trusted advisor in the Maltese insurance sector. We provide services to most domestic insurance companies with a strong market share when also considering non-domestic principals. Our extensive experience and deep understanding of the market allow us to navigate its complexities and seize opportunities for growth.
We provide a comprehensive suite of services designed to help insurance companies thrive in a dynamic business and regulatory landscape.
Our services include:
Implementation and set up supportcovering regulatory, tax, legal, and accounting
- Audit of financial statements and Solvency II reporting
- Accounting advisory services
- Transaction services
- Sustainability
- Insurance managed services and temporary secondment of staff
- Actuarial services
- Regulatory and compliance services
- Internal audit services
- Tax compliance and advisory services.
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