Ladies and gentlemen,


1. A very good afternoon and welcome to the fourth edition of The Asian Captive Conference 2021, the second consecutive year that we are holding ACC as a virtual conference. Although we are still held back from convening in person, it is heartening to see so many dedicated participants including Labuan industry players, regional captive professionals and risk owners continue to support this event.

2. We are also delighted to welcome new participants, many of whom are joining us for the first time, from Asia and beyond. We believe this is testimonial towards ACC growing into the premier captive conference in Asia and with that, we hope the ideas that flourish and alliances built through ACC will drive further awareness, understanding and deployment of captive and self-insurance in the region and beyond.

3. We at Labuan IBFC are ecstatic to have been named as Asian Domicile of the Year in 2021 for the third consecutive year. And, for the first time in our history, we were also named as International Domicile of the Year at the European Captive Review Awards this year. This has been judged based on the regulations we have, the innovative structures we offer and the number of new licensees we saw. Clearly, this is a recognition of Labuan's growing acceptance in Asia and beyond. I would like to take this opportunity to share that Labuan FSA will not rest on its laurels, and we are looking forward to working with industry to further enhance our self-insurance offering.

4. Although nearly two years have passed since the initial outbreak of COVID-19, it is still a major risk that organisations continue to grapple with and try to prepare for as we head into 2022. On the healthcare front, medical advances in the past two years have added weaponry such as vaccines, breakthrough medications and innovative treatments to our counter-pandemic arsenal.

5. Meanwhile on the business front, organisations too have had to quickly adapt to sudden outbreaks during the pandemic. On one hand there were intermittent business interruptions to contend with. On the other, when it was possible to be in operations, output and performance, there were marred by challenges such as restrictions of remote working and technical or supply chain disruptions.

6. In these trying times, resilience is critical for organisations to adapt quickly to disruptions while maintaining business operations and safeguarding people, assets, and overall brand equity. What, then, does a resilient organisation require? What weaponry do they keep in their risk management toolboxes, ready to deploy if the situation calls for it?

7. Increasingly, we are seeing a rise in captive’s popularity globally driven not just by the pandemic, but also insurance market challenges and a record number of natural catastrophes. Proving to be an effective tool in responding to risks and changing market conditions, captive formations have been on the rise steadily. At the same time, the Labuan captive business model, which utilises Protected Cell Companies (PCCs), has gained traction as a cost-effective method of operating captives. This could be attributed to a greater appreciation for self-insurance as a component of a dynamic risk management strategy, as well as the recognition of its cost advantages in light of the hardening (re)insurance market.

8. For instance, in Marsh’s “2021 Captive Landscape Report”, it recounted over 100 captive formations in 2020, which is almost double the formation in 2019. This is a continuing trend into 2021, where Marsh reported it is on-track to another 100 new captive formations by year-end.

9. This brings us to the theme of today’s conference, “Democratisation of Self-Insurance benefitting from cell captives in a challenging insurance market”. The conference agenda, designed in collaboration with industry players, will highlight how risk profiles have drastically evolved in recent times; how early adopters of self-insurance were able to leverage on their captive vehicles to navigate through turbulent times; and most importantly, what makes self-insurance an accessible and feasible solution for the masses.

Ladies and gentlemen,

10. Allow me to share the most recent information on captive’s performance at Labuan IBFC. As of the third quarter of 2021, the total premium had increased by USD71 million, primarily due to premium underwritten by captives entities. The premium for captive business has increased by 28%, primarily due to the engineering class. The growth was aided by the presence of a Malaysian-owned captive insurer. The net retention rate for captives stood at almost 72%. This is demonstrated by the steady growth of the captive business, with another 18 captives approved in the third quarter of 2021.

11. Most of the premiums are of Asian origins, particularly from Malaysia and Japan. Labuan IBFC's development over the years has resulted in a diverse pool of financial institutions, including numerous international insurers and reinsurers, establishing a presence in order to capitalise on Asia's rising potential. Labuan IBFC is now home to 232 insurance and insurance-related entities, including 64 captives. In terms of geographical contribution, Asia is the main contributor with almost 92% of the premium while the remaining 8% are captives based in the US and Europe. There are of course, still considerable room for Labuan’s captive industry to continue positioning itself to serve the Asian market.

12. These captive market opportunities are bolstered further by the enabling environment created by a supportive regulatory framework. The Authority will continue to review the legislation in consultation with relevant stakeholders, including industry players, to ensure that it is consistent with international standards and best practices, as well as to allow for diversification and expansion of niche product and service offerings in Labuan IBFC. In comparison to other captive markets, the current Labuan legislation is regarded as the most market-adaptive, particularly the provision on protected cell companies (PCC), both conventional and Islamic. Labuan IBFC indeed, is well-positioned to advance into the next phase of development as one of Asia's leading captive insurance hubs, leveraging a critical mass of insurance expertise, a robust yet flexible regulatory framework, and a broad range of risk management products.

13. Moving forward, Labuan IBFC will be shaped by shifting market dynamics and global financial developments. Labuan FSA, will continue to focus on strengthening Labuan IBFC's position as a captive domicile hub by making the captive sector as a primary focus in the Labuan IBFC's Strategic Roadmap for the next five years, which spans the years 2022 to 2026. This includes intra-Labuan business, captive insurance companies, insurance intermediaries, and a PCC structure, among other things. One of the goals is to strengthen Labuan IBFC's complementary roles to Malaysia's economy, which will include the development of the Labuan insurance industry as a whole.

Ladies and Gentlemen,

14. To conclude, I would like to congratulate Labuan IBFC Inc. and the Labuan International Insurance Association (LIIA) for successfully organising this virtual conference. I also take great pleasure in commending LIIA, which represents all insurance and insurance-related players in Labuan, for their continuous support and proactive initiatives in driving the industry forward. In fact, the awards recognising Labuan IBFC as a leading captive domicile mentioned earlier would not have been possible without the enormous effort and commitment from our industry players and the positioning and promotion undertaken by Labuan IBFC Inc. as well.

15. Additionally, I would like to express my appreciation towards our distinguished panel of speakers who are all leading practitioners and experts in the captive and self-insurance space. With their collective expertise, I am certain we may look forward to insightful and enriching discussions in the sessions to come. My gratitude as well to our participants who are with us this afternoon. Please take this opportunity to discuss the on-coming challenges and prospects for further development of self-insurance in the region.

16. My assurance to you and the greater marketplace is Labuan IBFC will continue to provide a truly robust, varied, and well-regulated ecosystem. We continue to be consultative in our approach, robust in our regulatory standards and supervision while being cognisant of the everchanging needs of our players.

17. With that, ladies and gentlemen, I wish you a fruitful conference ahead. Thank you.