Guidelines on Capital Adequacy Requirements for Labuan Captive Insurance and Takaful Business: Solvency Standards
The Labuan FSA Guidelines on Capital Adequacy Requirements for Labuan Captive Insurance and Takaful Business came into force on 1 November 2019.
Core solvency requirements:
A Labuan captive insurer must at all times maintain a surplus of assets over liabilities of not less than the highest of the following three amounts:
1. Working capital of RM300,000;
2. 10% of net premium income for the preceding year;
3. 10% of outstanding loss reserves for the preceding year.
A captive insurer must carry out a capital adequacy assessment at the end of each financial year and report it to Labuan FSA; where the surplus is below the requirement, it must immediately take remedial measures such as injecting additional capital.
