Issue link: https://maltatoday.uberflip.com/i/697149
maltatoday, SUNDAY, 26 JUNE 2016 IV Business & Finance MT: What other initiatives have been taken in the past and how does PKF Malta see the potential of Malta as a domicile of choice for insurance compa- nies at large? DH: PKF Malta, with the support of FinanceMalta, Bee Insur- ance Management and a line of esteemed speakers, hosted an event in New York on 29 March 2016. This event was one of a series of events in the PKF Malta calendar to promote Malta as a domicile of choice. This Insurance Summit had its primary aim to encourage US Companies to host their European Captives in Malta, topics discussed concerned: What it entails, how to survive Fatca and CRS, what they should look out for and finally what the advantages would be for them to consider Malta. We are planning to host a follow-up event at the end of summer in New York with local support under a different set up, meeting with US captive own- ers in a more intimate setting under the capabilities of Cap- tive Review. The main aim will be to reach risk managers and decision-makers to focus their periscopes on Malta as a domicile of choice when insurance risks in Europe are being considered. FinanceMalta, as a private/ public partnership is geared to promote the sector, mindful that it faces tough competition fielded by established jurisdictions, yet it succeeds to attract international companies seeking an alternative EU jurisdiction traditionally offered by Dublin and Guernsey. How successful was the event? DH: The event held earlier this year, was well received and at- tracted a gathering of insurance consultants, insurance managers and service providers in the field. The event served as a catalyst in placing Malta in the equa- tion, when Insurance Managers propose domicile choices for their multinational clients. This was the first initiative of its kind organised by a Maltese contingent in New York as a Malta specific event. We are pleased that the event created interest from large captive managers the likes of AON, JLT Marsh and R&Q. In attendance were industry service providers providing technology solutions the likes of Verisk Insurance Solutions, Intralinks and Rante. Legal firms, investment manag- ers, banking services from Wells Fargo and Barclays, rating agen- cies and heads of state regulation in Delaware. Solvency II was a heated topic amongst delegates at the conference, which fre- quently resurfaced over lunch and breakfast What is the immediate follow up event lined up? DH: The momentum generated by the first event, encouraged us to continue the efforts in promot- ing Malta as a domicile of choice for European Captives. PKF Malta will be attending a Captive Own- ers Summit organised by Captive Review in New York to further promote Malta's unique benefits in October 2016. FinanceMalta being at the forefront in ensur- ing Malta "remains a compelling proposition for prospective inves- tors seeking to establish or extend their footprint in Europe". The New York Captive Owners Sum- mit is a highly exclusive learning and networking event especially created for captive America's leading captive owners. Are any local initiatives being organised in line with Solvency II? DH: PKF Malta conducted a Solvency II compliance survey last year, which was circulated amongst the Maltese registered firms. With Solvency II then being just around the corner, we felt that there was a need to gauge the impact of the Solvency II regula- tion on the Maltese insurers. Essentially, the questionnaire touched upon the main aspects of the Solvency II regulation, that is, Pillar I (the system that was utilised and the Forward Look- ing Assessment of Own Risks, Pillar II, Pillar III, management and personnel, the costs incurred as well as the perception of the Maltese insurers in view of the regulator). The target popula- tion included all firms licensed by the MFSA in 5 categories: Insurance Principals (Insurers and Reinsurers), Affiliated Insur- ance Companies (Insurers and Reinsurers) and Protected Cell Companies (PCC), thus a total of 58 firms. Essentially, the gen- eral feel amongst the insurance companies was that the Solvency II regulation was deemed to be a significant improvement (91.67%) over Solvency I in maintaining the solvency and financial integrity of insurers or reinsurers. Most of the firms also consider this regulation as "helpful" as it assists them to maintain discipline and monitor risks. The last weeks of May or June brought about the first Solven- cy II deadline for the majority of insurance companies, what is the general consensus? As a follow up a Day One report- ing and QRT readiness question- naire for Maltese Insurers Survey is being lined up for the summer, with the aim of addressing the readiness and time issues (if any) encountered following day one reporting. If there were any gaps between the preparatory stage requirements and the full roll-out requirements for Pillar 3. What was the time needed to complete the day one deadline, if this was met and same for QRT reporting deadline. At what stage is the narrative reporting requirements of Pillar 3… these and other ques- tions will render a clearer picture of the market, now that Solvency II is in force. One hopes that the risk-based approach of Solvency II will be a catalyst for risk manag- ers overseeing capital and the value allocation thereof is more aligned to underwriting criteria. The internal model will eventually become part and parcel of the decision making process, even going into specifics relating to classes of business written and feasibility thereof in terms of the group's risk appetite. What other initiatives have been taken in the past and how does PKF Malta see the potential of Malta as a domicile of choice for insurance compa- nies at large? DH: As part of the services which PKF Malta can offer, apart from the core Internal and External Audit services, we work closely with specialised service providers within the local indus- try. Being an integrated member firm of PKFGroup, we also work closely with international offices to deliver specialised technical solutions to the local insurance industry. We have the ability to give a tailor made service which goes beyond mere compliance offering a whole range of flexible services. Earlier this year, PKF staff also attended the SIFMA – Insur- ance and Risk Linked Securities Conference in New York, taking the opportunity to discuss with experts, the emerging trend concerning the ILS market. This is expanding products to cater for a more diverse range of cedents, such as captives. The ILS vehicle provides a means by which the captive may now also transfer its catastrophe risks, other than solely relying on the traditional reinsurers. This is still in its early stages, in the same way that the non-traditional use of ILS's is gathering popularity to provide capacity for embryonic cat risks, such as cyber risk and operational risk. It is evident that opportunities for growth in US market are open for Malta as an EU jurisdiction to secure its share. The answer is that as an EU member state and EIOPA member, Malta has contributed to the development of Solvency II and its expertise has grown thanks to the open dialogue with the local one-stop shop authority (MFSA). More needs to be done to continue promoting our benefits in comparison to other European domiciles, which may have so far secured a comparatively larger share of the Captives market. Nonetheless, it helps noting that the cost for setting up and run- ning these companies in Malta is reputed to be on average 60% less costly compared to other EU jurisdictions. Danielle Hermansen ACII Char- tered Insurance Risk Manager, Mgt (Maastricht), is a director at PKF Fiduciaries International Mal- ta Limited. She has been in the insurance industry for 15 years, working both as an underwriter and broker, specialising in com- mercial business. She has more recently worked in the captive insurance management industry #NowIsTheTime #TakingTheCurve Approved and issued by HSBC Bank Malta p.l.c., 116, Archbishop Street, Valletta VLT1444 which is regulated by the Malta Financial Services Authority. REQ NO: 90944 With affordable personal loans for all your needs. We all have dreams and ambitions. It can be hard, but we can achieve some of them on our own. Then there are those that we can only achieve with help from a bank that really understands what is important to me. So whatever your next dream, whether it's a new car, a new bike or maybe that new kitchen you've always wanted, we are committed to provide affordable Personal Loans to help you make it a reality. Speak to us today. @HSBC_MT Click hsbc.com.mt Call 2380 1000 /HSBCMalta Creating momentum DANIELLE HERMANSEN, of PKF Malta, discusses the next event in line for promoting Malta as a domicile of choice for European Captives in October 2016 – New York, the success of the industry's latest events and what essential elements remain talking points across the financial landscape