Atlas Insurance looks to triple protected cells
Atlas Insurance could triple its protected cell facilities by 2011, managing director Michael Gatt has told The Times Business. The insurance group has licensed three cells in two years and a fourth should be established soon. "In five years we...
Atlas Insurance could triple its protected cell facilities by 2011, managing director Michael Gatt has told The Times Business.
The insurance group has licensed three cells in two years and a fourth should be established soon.
"In five years we aspire to license 15 to 20 on our books," Mr Gatt said. "The international response to captive insurance and cells is encouraging. The fact that Aon has set up a protected cell company in Malta is positive, because it is the leader in insurance management.
"It obviously sees a future for Malta in this field. The big names in insurance management are present in Malta - Heath Lambert and HSBC have used our cell facility and we are in the process of applying for a cell introduced by ARM. Other international names like Marsh, Willis, JLT and Heritage have expressed interest."
Atlas Insurance has been actively marketing Malta as the ideal European domicile for protected cell facilities. Just last month, the company organised a seminar at the Lloyds building in London for over 40 insurance broker members of the British Insurance Brokers Association.
The event was supported by the Malta Financial Services Authority. According to Mr Gatt, similar events could be held in northern England and Scotland.
"We went to London to raise awareness of protected cell facilities in Malta and to highlight their advantages," Mr Gatt explained. "The most important advantage is that Malta is an EU member, and a protected cell licensed in Malta may conduct business all over Europe.
"Insurance forms an integral part of the promotional efforts made by the MFSA in projecting Malta as a financial services centre. When Malta is showcased at these events, we do see genuine interest. However, results usually come in the medium- to long-term. We have had follow-ups a year after an initial enquiry. Things take time to develop - organisations sometimes must adjust from insuring with a large multinational to doing so with their own cell."
Atlas was the first insurer to establish protected cell facilities in Malta. French group April has set up the second PCC and Aon a third. Others are in the pipeline.
In simple terms, Mr Gatt likes to describe protected cell facilities as mini insurance companies. There is a smaller requirement for capital in comparison to a captive's €2.2 million. A protected cell shares the host company's legal persona so it does not have a separate board, uses the resources of the PCC, and consequently establishment is far less complicated. However, a cell is ring-fenced and insulated from the financial performance of both the cell company's core and that of the other cells.
Mr Gatt says Malta is an emerging force within the EU for captive insurance and cell business, although it does face competition from Luxembourg and Gibraltar. Larger captive markets are thriving in Guernsey, Bermuda and the Cayman Islands.
Captive insurance legislation was in place long before Malta joined the EU in 2004 but Mr Gatt says business never got off the ground because insurers continued to turn their attention to longer established offshore centres.
"Malta's accession to the EU provided an important EU-based alternative to these centres and immediately became a target for the management companies which saw Malta's potential as a captive destination," Mr Gatt pointed out. "Following the introduction of protected cell legislation in 2004, Atlas saw the potential and was the first company in Malta to offer protected cell facilities. These facilities make the managers' target audience even wider because it is not just the big fish they need to catch - they can also target the medium-sized companies.
"Most of the business will come through the managers - they will bring the clients over and then manage their cell. I would say the current climate is in our favour - premiums are hardening abroad. Insurance companies have less capital so they are reinsuring more and the relative cost is rising. It is a good time for the captive and cell facility option to be considered by organisations which have a robust business model, including a good risk management infrastructure."
The insurance group has licensed three cells in two years and a fourth should be established soon.
"In five years we aspire to license 15 to 20 on our books," Mr Gatt said. "The international response to captive insurance and cells is encouraging. The fact that Aon has set up a protected cell company in Malta is positive, because it is the leader in insurance management.
"It obviously sees a future for Malta in this field. The big names in insurance management are present in Malta - Heath Lambert and HSBC have used our cell facility and we are in the process of applying for a cell introduced by ARM. Other international names like Marsh, Willis, JLT and Heritage have expressed interest."
Atlas Insurance has been actively marketing Malta as the ideal European domicile for protected cell facilities. Just last month, the company organised a seminar at the Lloyds building in London for over 40 insurance broker members of the British Insurance Brokers Association.
The event was supported by the Malta Financial Services Authority. According to Mr Gatt, similar events could be held in northern England and Scotland.
"We went to London to raise awareness of protected cell facilities in Malta and to highlight their advantages," Mr Gatt explained. "The most important advantage is that Malta is an EU member, and a protected cell licensed in Malta may conduct business all over Europe.
"Insurance forms an integral part of the promotional efforts made by the MFSA in projecting Malta as a financial services centre. When Malta is showcased at these events, we do see genuine interest. However, results usually come in the medium- to long-term. We have had follow-ups a year after an initial enquiry. Things take time to develop - organisations sometimes must adjust from insuring with a large multinational to doing so with their own cell."
Atlas was the first insurer to establish protected cell facilities in Malta. French group April has set up the second PCC and Aon a third. Others are in the pipeline.
In simple terms, Mr Gatt likes to describe protected cell facilities as mini insurance companies. There is a smaller requirement for capital in comparison to a captive's €2.2 million. A protected cell shares the host company's legal persona so it does not have a separate board, uses the resources of the PCC, and consequently establishment is far less complicated. However, a cell is ring-fenced and insulated from the financial performance of both the cell company's core and that of the other cells.
Mr Gatt says Malta is an emerging force within the EU for captive insurance and cell business, although it does face competition from Luxembourg and Gibraltar. Larger captive markets are thriving in Guernsey, Bermuda and the Cayman Islands.
Captive insurance legislation was in place long before Malta joined the EU in 2004 but Mr Gatt says business never got off the ground because insurers continued to turn their attention to longer established offshore centres.
"Malta's accession to the EU provided an important EU-based alternative to these centres and immediately became a target for the management companies which saw Malta's potential as a captive destination," Mr Gatt pointed out. "Following the introduction of protected cell legislation in 2004, Atlas saw the potential and was the first company in Malta to offer protected cell facilities. These facilities make the managers' target audience even wider because it is not just the big fish they need to catch - they can also target the medium-sized companies.
"Most of the business will come through the managers - they will bring the clients over and then manage their cell. I would say the current climate is in our favour - premiums are hardening abroad. Insurance companies have less capital so they are reinsuring more and the relative cost is rising. It is a good time for the captive and cell facility option to be considered by organisations which have a robust business model, including a good risk management infrastructure."