In collaboration with British Insurance Brokers Association (Biba) and with the support of the Malta Financial Services Authority (MFSA), Atlas Insurance has held an afternoon seminar at Lloyds Building in London with the theme Protected Cells – When Size Does Not Matter.
Atlas Insurance PCC Limited is actively promoting Malta as an ideal European location for insurance business and, particularly, its protected cell facility.
Back in Malta, Atlas managing director Michael Gatt, who co-chaired the seminar with Peter Staddon, head of Biba’s technical services, is enthusiastic about the response and the interest that was generated among the 50-odd participants.
Mr Gatt is very optimistic about the prospects for the development of the protected cell business.
Mr Staddon is also satisfied with the feedback at the event, saying: “Most of the attendees thought it was worthwhile.” Encouraged by the response, he hopes that Biba and Atlas will organise similar seminars for other regional brokers who were unable to travel to London.
In the UK, Mr Gatt outlined Atlas history and its connection to Commercial Union, Guardian Royal Exchange, Norwich Union and AXA, which merged into Atlas.
Mr Staddon described its conversion to an insurance company and ultimately into a protected cell company. Atlas Group comprises AXA PPP healthcare, an insurance broking arm, and an investment services provider.
AXA maintain a shareholding in the Atlas Group.
Matthew Bianchi, a partner at legal firm Ganado & Associates outlined Maltese PCC regulations and highlighted the insulation of cell assets and liabilities, possible arrangements for non-recourse to core assets, and cell dividend distributions.
Neville Gatt, a partner at PricewaterhouseCoopers (Malta), gave a presentation on the tax treatment of insurance business. “Malta is a high tax jurisdiction, but operates a full imputation system of taxation which results in tax refunds to shareholders, providing extremely tax-efficient results,” he pointed out.
Praveen Sharma of Marsh Ltd, who attended the seminar, commented that the Malta tax system enjoys EU approval. The combination of EU-compliant PCC regulations and the Maltese tax system offer a very attractive package for Malta-based insurers and cell promoters.
Guest speaker Callum Beaton, managing director of Callum Beaton (Insurance Consulting) Limited, gave an independent view on captives and the Maltese connection. He highlighted the collection of benefits of creating a cell in a Maltese PCC and pointed to some issues which required careful consider for potential pitfalls to be avoided. The main strengths of a Maltese cell derive from the ability to underwrite risks cross border in the EU, he explained.
Mr Beaton highlighted the advantages of creating a captive cell within a PCC as opposed to forming a captive insurance company. “The PCC concept is well accepted and recognised: a cell does not have directors and therefore it holds no board meetings, reducing travel costs significantly. A cell offers simplified administration for cell owners who will be able to focus on insurance,” he said.
David Mifsud, senior underwriter at Atlas, focused on cells writing third party risks and their distinction from captives. “A cell does not only cater for captive insurance business,” he emphasised.
“A cell owner may be an intermediary or an intermediary’s client with a plan for selling insurance to third parties.” He underlined the various reasons for creating a cell and explained how the classic benefits of setting up a captive also apply to a cell.
He pointed out that the initial capital requirement and the running costs of a cell are much less than those for establishing a captive insurance company and therefore “the creation of a cell would be ideal for an intermediary or his client irrespective of their size”.
Mr Mifsud presented case studies to highlight the various roles that a broker could play in different scenarios. A broker can be an owner of a cell, and can act as agent and/or claims handler of the cell in the country where the risk is situated. He can also act as the broker of the cell for reinsurance cover.
A cell within Atlas may also be managed by an insurance manager: Atlas enjoys excellent relations with Maltese subsidiaries of international managers.