PKF Malta is in the process of getting a licence to provide internal audit services to the captive insurance industry.
“A normal insurance company has a lot of customers and the public needs to be protected¸ so there is more emphasis on their statutory audit. A captive is totally different as it is a parent company offering its insurance services to its own subsidiaries¸” audit partner Mrs Donna Greaves explained.
“Nevertheless¸ in Malta¸ under the Insurance Business Act¸ you need to be an approved internal auditor for captives and we are in the process of getting that licence.”
The new section will be headed by Mrs Donna Greaves¸ who has worked for the company for eight years and a partner for the past three. She will be assisted by Attila Radnai¸ who joined the team from Hungary¸ bri
nging with him four years of experience working for a Big Four audit company. PKF Malta senior partner George Mangion will also be heavily involved.
Captive insurance legislation was introduced to Malta in 2009 and in anticipation of this¸ a year before¸PKF Malta started promoting Malta as the ideal jurisdiction. Mr Mangion and other team members have attended several conferences in various countries¸ as well as organising PKF Malta’s own events.
The legislation has been repeatedly updated and has been extended to Protected Cell Companies and Incorporated Cells Companies: a PCC is a single legal entity and cells within a PCC have no legal personality; an ICC¸ on the other hand¸ is a unique vehicle with each cell having a separate corporate personality. Malta is the only EU member which has both PCC and ICC legislation. Captives are regulated by the Insurance Business Act and need to be licensed by the Malta Financial Services Authority. However¸ they have some advantages: their application is approved within three months¸ rather than six¸ although they still require a ‘fit and proper’ test for their executives and need to have ‘know your customer’ procedures in place¸ as well as an identified ‘ultimate beneficial owner’.
The proactive legislation is crucial as Malta has considerable competition from Ireland and Gibraltar. Malta’s membership of the EU gives it an edge over Gibraltar¸ which has a unique situation. For example¸ Mr Radnai explained¸ Gibraltar is part of the EU for VAT but not for insurance business. Malta also has lower servicing costs and a very favourable tax regime. PKF Malta is drawing on the expertise of another member of PKF International – PKF Littlejohn – which is already very active in this sphere¸ with seven partners and five managers dedicated to captive insurance.
Solvency II will impose considerable burdens on all insurance companies¸ and they will be very complex and costly. PKF Littlejohn has been in the insurance market for over 100 years in London but wants to expand and sees Malta as the ideal conduit. The implementation of Solvency II by 2016 has created a great demand for internal audit services for captive insurance industry – among other things – a demand that PKF Malta in