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Malta, a small island state at the heart of the Mediterranean, has been a melting pot of civilizations for over 7,000 years. Dubbed “Malat”, meaning safe haven, by the Phoenicians, the island is strategically placed in the middle of the Mediterranean, equally distant to Gibraltar and Alexandria and only 60 miles away from Sicily.

An independent nation since 1964 and an EU member state since 2004, Malta is a breeding ground for innovation and enterprise.

Despite the impact of the COVID-19 pandemic and the war in Ukraine on the global economy, the financial services industry in Malta remained resilient in the last two years, witnessing an increase in employment within the sector – an indicator of its strong performance and contribution to the country’s economy.

The National Statistics Office (NSO) revealed that in 2022 the Maltese economy grew by 6.9% in real terms. The Central Bank of Malta (CBM) reports that the local economy is expected to grow by a further 3.7% in 2023. Unemployment fell to a record low of 3% by the end of 2022 and is expected to remain stable in 2023. The CBM reported that as at December 2022, inflation stood at 6.1%, however this figure is expected to fall to 4.5% in 2023.

The Malta Financial Services Authority (MFSA) is the single regulator for financial services in Malta. It was established by law as an autonomous public institution on 23 July 2002. The MFSA’s remit covers all areas of the local financial system including credit institutions, securities and investment services companies, insurance companies, pension schemes, trustees and company service providers.

Over the last 20 years, the MFSA constantly sought to keep pace with market developments and financial innovation through the introduction of sound and innovative legislation. Malta was the first, and still is the only EU member state, to introduce Protected Cell Company (PCC) legislation in 2004. As at the end of 2022, the MFSA regulated and supervised a total of 14 Protected Cell Companies and 77 cells. The concept of PCCs was extended by the introduction of Securitisation Cell Companies regulations in 2014.

Many PCCs are set up as “rent-a-captives” offering cell facilities to interested organisations either wishing to have a captive risk financing tool or for writing third-party risk to increase revenue and profit. Operating from Malta allows the PCC, on behalf its cells, to carry on insurance business on a direct basis anywhere in the EU and European Economic Area.

Compared to offshore jurisdictions, such as Guernsey and Bermuda, Malta’s PCC legislation requires individual cells to have secondary recourse to the PCC core capital. This ensures that third-party policyholders or beneficiaries of a cell have the same level of protection required to be in place for other EU insurers. This also allows a cell not to be capitalised to the minimum EU directive requirements for standalone insurers so long as these requirements are met by the PCC as a whole.

Aon, Gallagher, Marsh and Willis have all set up PCCs in Malta offering rent-a-captive facilities to their clients. MDS Group was one of the first to set up a PCC in Malta with the incorporation of Highdome PCC Ltd in 2011. See www.highdomepcc.com. Highdome currently has 4 active cells and 2 more in the pipeline. Highdome is managed by 2RS Elmo Insurance Managers Ltd, a licensed insurance manager forming part of the DIOT-SIACI Group.

The current “hard” insurance market has seen a significant increase in captive formations including PCC cell captives. The Insurance and Pension Supervision Unit at the MFSA recognizes the limited scope of captives and applications for such entities are placed on the fast-track for licensing and several reporting exemptions apply.

Captives have proved over the years to be a very efficient way for organisations to retain risk, which they can afford to retain due to the size of their balance sheet or believe they can retain at a lower overall cost than by purchasing insurance. Organisations are sometimes forced to retain risk as there is no traditional risk transfer mechanism available to them.

As well as providing a formal structure in which to retain and finance risk effectively, captives also provide a medium through which to transfer risk to the reinsurance market. This is not always necessary or financially attractive depending upon the state of the market, but it does provide an option not available without a captive in place.

Business and pleasure coexist happily in Malta, helped along by the islanders’ knack of mixing the businesslike British character adopted from their former colonisers with their own, more relaxed Mediterranean characteristics. Maltese hospitality is legendary – a long history of greeting visitors and adapting to the demands of the less welcome has left the Maltese with a truly international attitude characterized by openness, tolerance, friendliness and a zest for life.



John Stivala

John Stivala

General Manager - 2RS Elmo Insurance Managers Limited

John Stivala is General Manager of 2RS Elmo Insurance Managers Limited. He is responsible for the overall operation of the company and for developing the book of business. John has over 35 years’ experience working in insurance in Malta and in London and during his career helped establish and manage several insurance companies, including PCCs. For many years John held the position of Vice-President of the Malta Insurance Managers Association, an association he helped to set up in 2007.