Dato’ Seri, Dato’-Dato', friends from overseas, Distinguished Guests,

1. Assalamualaikum and a very good morning and welcome to the seventh edition of The Asian Captive Conference 2024. For those abroad, welcome to Malaysia. I am delighted to be part of this significant and momentous event with the theme "Asian Anchors: Leading the Way in Captive Innovation". It is anticipated that the conference this year will offer an extensive range of networking opportunities and in-depth discussions within the captive insurance and (re)insurance community, featuring distinguished speakers, insightful panels, and networking sessions aimed at driving industry growth. This conference is a testament to our collective commitment to innovation, collaboration, and excellence in the captive insurance industry. To the panellists and participants, your presence here today reflects the growing prominence of Asian captives, in general, and specifically, ACC as the annual event that brings together captive professionals, regulators, and business practitioners for an intellectual discourse over topical issues on captives.

2. Against today's backdrop of an evolving business landscape with shifting challenges and a limited supply of commercial insurance, demands for adequate protection cover to cater for unwanted eventualities by Asian corporates are on the rise. Catalysed by the widespread post-pandemic effects, risk landscape has become more intricate and complex. Cyber risks like data breaches, and unpredictable natural disasters of significant proportion exacerbated by climate change risk, are some of the emerging business concerns that demand more comprehensive and innovative insurance solutions in the region.

3. Adding more complexity to market dynamics, advancements in technology – AI and Generative AI are transforming and revolutionising the way that customer interacts. As this has an impact on cost structures, any risk management innovations would need to be cost-efficient aside from ushering in modernisation per se. I’m confident that this ACC would facilitate for exchange and synergy of good ideas and greater understanding and adoption of captive and self-insurance solutions across Asia and beyond, addressing these new challenges head-on.

4. Obtaining insurance for pecuniary risks such as cyber risk is becoming increasingly challenging, and particularly due to the evolving nature of digital threats. In recent months, the Munich Re report has recorded a significant increase in cyber-attacks, with ransomware emerging as the main threat. Chainalysis reports that yearly ransom-related cryptocurrency payments increased from US$567 million in 2022 to US$1.1 billion in 2023. In another study, Statista had projected that the annual global cost of cybercrime will reach a staggering US$13.8 trillion by 2028, from the US$8.15 trillion loss recorded in 2023. This overall trend illustrates the importance of cyber insurance as one of the key components of cybersecurity measures and digital risk management.

5. Despite these challenges, the level of protection to the business community continues to be insufficient and underinsured. Based on Munich Re Cyber Risk and Insurance Survey 2024, 87 percent of global decision-makers believed that their company is currently not adequately protected against cyber-attacks. Therefore, cyber insurance and associated resilience need to be further increased. Cybersecurity risks are a growing concern for businesses of all sizes and industries. It is likely captives will continue to play an increasing role in providing tailored coverage for these types of risks. These solutions address the rapidly evolving nature of cyber threats and offer businesses greater flexibility and customization.

Ladies and Gentlemen,

6. Let me now turn to the latest developments in Labuan IBFC. Despite the challenging global financial landscape, Labuan IBFC continues to forge ahead in its business expansion. In summary, the Labuan captive business continued its upward trajectory last year, recording a 9.4 percent growth in total gross premiums to USD624.6 million (2022: USD570.9 million) – an all-time high premium volume recorded since the prior five years. Labuan captive premium volume had grown to contribute 34.7 percent of the total general industry premiums. Premium growth was mainly driven by fire, liability, industrial special risks and fidelity business lines. Over the 2019-2023 period, the net retention of captives remained high in the range of 64 percent to 70 percent. The captives’ underwriting ratio also improved from 46.7 percent to 48.5 percent, due to higher earned premiums and increased net commission income.

7. Furthermore, I would like to share with you the snapshot of the captive and insurance performance in 2024 - Labuan IBFC is now home to 225 insurers and insurance intermediaries, including 95 captives (including several cells). As of the second quarter of 2024, the total gross premium of the Labuan insurance industry stood at USD1.1 billion. A total USD420 million worth of premiums were underwritten by Labuan captives in the first half 2024 and about 64 percent of these premiums were from the international market while 36 percent were from the domestic market. In fact, Labuan's captive market share accounted for 39 percent of the entire insurance industry in the Centre.

8. In addition, Captives recorded an inflated underwriting margin of 10.5 percent or USD7.5 million due to lower net claims – a reduction of 7.4 percent or USD8.3 million. Captive remains the main source of the insurance industry's profitability, comprising a higher share of 41 percent or USD102 million.

9. It is important to note that the new captive omnibus guidelines issued in 2023, have unveiled more innovative applications of Labuan captive structures. The new policy not only expanded the type of captives that can be set up beyond the conventional pure and rental captives, and the type of risks that can be underwritten but also allows Labuan captives to underwrite indirect insurance interest risks. This reflects Labuan FSA’s recognition of the Labuan captive sector’s growing maturity and higher technical capabilities to underwrite more complex risks. With the recent policy shift, it is encouraging to note that, Labuan has recently registered five new External Rent-A-Captive (X-RAC) entities. These entities provide coverage across various classes of business, including comprehensive general liability, product liability, cyber liability, extended warranty, and earthquake coverage.

10. With increasing insurance demands amongst corporates including for alternative risk management vehicles which include captives, it is imperative that regulations also evolve in tandem. Regulatory framework needs to be sufficiently stringent yet conducive to growth impetus to advance captive development. This is key to accelerate growth in captive formations and evolve the sector’s technical capacity and capabilities further to cater to more complex business risks as seen in Europe and the US. Later in the ACC, I believe there is a session that will focus on regulatory styling as one of the key factors for captive market developments.

Ladies and gentlemen,

11. The overall global captive insurance industry is evolving rapidly, poised to reach a projected $250 billion global market value by 2028. This development has been driven by global demands, attributed by hard market conditions, new and emerging risks that the insurance industry has been unwilling to cover, and increased volatility internationally. Statistics indicate a clear upward trend in the number of captives, and most domiciles around the globe have seen new formations on the uptick. Statistics show that the number of captives has been on the increase, and most domiciles around the globe have seen new formations on the rise. The number of captives has been increasing for the last four years, from 5,879 in 2020, to 6,074 in 2021, to 6,093 in 2022 and 6,181 at the end of 2023, according to the Captive Managers and Domiciles Rankings + Directory 2024 published by Business Insurance. As more companies become comfortable using captives and understanding the value they add, captives are likely to become further embedded into corporate risk strategies, regardless of market conditions.

12. I am pleased to inform that Labuan IBFC has been identified as a reliable captive jurisdiction in terms of its governance and support structure as Labuan was placed second for the highest number of captives domiciled in Asia. Based on the recent update published by the Captive Review, Labuan was ranked among the top ten captive centres in terms of number of growths. In fact, according to the global ranking published by Business Insurance April 2024 edition, Labuan IBFC is ranked at 22nd out of 69.

13. One of the primary factors contributing to Labuan IBFC's sustained growth is its well-regulated business environment, which gives investors’ strong confidence to continue utilising Labuan IBFC. Given the ever-changing nature of the business environment, we will continue to strengthen our regulatory and supervisory measures to ensure orderly business, market stability and further foster a reliable business environment for captive business to flourish as it continues to be at the vanguard of risk management innovation.

Ladies and Gentlemen,

14. On this occasion, I am also pleased to announce the inaugural Labuan IBFC Industry Awards 2024 or ‘LIFIA24’ to be presented by Labuan FSA this year. The nomination period for the LIFIA2024 is officially open now, and these prestigious awards recognise the exceptional achievements and groundbreaking contributions within Labuan IBFC industry. We invite you to submit nominations for those who are driving innovation in Labuan IBFC in the area of Captive Insurance amongst others. This is your opportunity to highlight and honour those who are truly making a difference.

15. With that, I would like to conclude by expressing my sincere gratitude to the organisers for the kind invitation, and I wish everyone a highly productive and insightful conference ahead. With bismillahirrahmannirrahim, I declare the forum open.

Thank you.