10 September 2020Asia analysis

Labuan registers more captives in H1 2020 than in all of 2019

Labuan IBFC registered seven new captives in the first six months of 2020, more than were registered in the whole of 2019.

The seven new captives brings the total number of captives based in Labuan to 56 as at June 2020.  This represents a growth of 9.8 percent year-on-year.

Four of these captives are foreign owned and three are owned by Malaysian entities. Five are protected cell companies (PCC).

Labuan IBFC said the numbers show it is the fastest growing captive centre in Asia. In terms of gross written premiums, Labuan’s captive insurance business accounts for 31.4 percent of the total gross premiums underwritten in Labuan IBFC, or $267.9 million. More than 72 percent of the total premiums originated from international markets.

In 2019, Labuan IBFC recorded a 14.2 percent growth in total gross premiums for

its captive insurance business, amounting to $457.5 million.

Labuan IBFC chief executive Farah Jaafar-Crossby said the steady growth of captive business could be attributed to the heightened understanding of the benefits of self-

insurance in Asia and the hardening reinsurance market.

“Other factors could include changes in the international tax landscape, prompting companies to seek midshore jurisdictions like ours in order to ensure tax compliance,” she added.

Jaafar-Crossby noted that Labuan is the only jurisdiction in Asia with a PCC structure. With the ongoing pandemic, there has been a heightened interest in PCCs as a cost-effective self-insurance vehicle,” she said. “As such, we will be hosting the 3rd Asian Captive Conference, themed ‘Agility in the COVID Climate’ on November 10.”