Business Activity

LEGAL PROVISIONS OF INTEREST TO LABUAN INSURANCE COMPANY

A Labuan insurance company includes Labuan Insurer (Life and non-life), Labuan Professional Reinsurer (Life and Non-Life) and Captive Insurer. These companies may transact general insurance business or life insurance business whether as direct business or as reinsurance accepted business. However, these companies cannot transact Malaysian domestic business except as reinsurance and permitted Malaysian risks.

As an incentive for Malaysian insurers to use Labuan based entities for their reinsurance needs, premium ceded to reinsurers licensed under the (Labuan Financial Services and Securities Act 2010) are 100% deductible for tax computation purposes.

Under new Risk Base Capital Framework, reinsurers licensed under the (Labuan Financial Services and Securities Act 2010) may be classified as qualified reinsurer.

Malaysian Insurance companies must ensure that in placing reinsurance they optimize the domestic reinsurance market prior to seeking support from the Labuan based re-insurers before securing overseas reinsurance support in their treaty and facultative arrangements.

Minimum solvency margin required is the higher of the following:

  • Share capital (or excess of assets over liabilities) referred to in minimum paid up capital on page 21; and
  • Life insurance business : 3% of actuarial valuation of liabilities
  • General Insurance business : 20% of net premium income