The Labuan International Business and Financial Centre (Labuan IBFC) of Malaysia has released its annual report. Asia's captive insurance industry is still in its infancy: companies set up captives mainly for risk financing or other risk management purposes, and the financial gains are not yet significant. Nevertheless, it firmly believes that the future growth potential of the Asia-Pacific captive industry is far higher than that of other regions of the world, and remains optimistic about the future development of captive insurance in Asia.

       Although the number of Labuan captives declined from 41 to 40 in 2016, direct insurance and reinsurance premium income grew 3.3% to US$1.4 billion—the highest since 2012—pre-tax profit rose 52.4% to US$387 million, and the solvency adequacy ratio reached six times the minimum regulatory requirement.

        While many companies still rely on traditional insurance, more sophisticated companies continue to explore significant commercial opportunities and risk management tools through captives, especially when the commercial insurance rates offered by the traditional market are unacceptable. In 2016, non-resident insurance business contributed 57.9% of total premiums. In response to crude oil price volatility, the local insurance industry successfully expanded into special risk businesses beyond engineering and transportation insurance related to oil trading. 
        Labuan IBFC of Malaysia has vigorously attracted wealth management business from the Asia-Pacific region. In 2016, the number of newly established funds targeting high-net-worth individuals increased 13.2% to 188, with 78.2% originating from the Asia-Pacific region, mainly for philanthropy, private wealth management and real estate planning.

        Attachment: Annual Report of the Labuan International Business and Financial Centre, Malaysia

Source: Labuan International Business and Financial Centre, Malaysia, 2017-04-28