Lofsa: Reinsurance to breach RM1bil


  • Business
  • Saturday, 26 Apr 2008

KUALA LUMPUR: Reinsurance businesses in Labuan are expected to breach the US$1bil mark in terms of gross premiums this year.

Labuan Offshore Financial Services Authority (Lofsa) chairman Tan Sri Dr Zeti Akhtar Aziz said that last year, the offshore insurance industry, particularly reinsurance business, grew by 40.3% to US$919.2mil, of which 62% were non-Malaysian premiums.

“This signals its growing position as a reinsurance centre,” she said at a briefing on Lofsa Annual Report 2007 yesterday.

Lofsa also announced the setting up of Labuan International Business and Financial Centre (IBFC) Inc Sdn Bhd, which is wholly owned by Lofsa.

Tan Sri Dr Zeti Akhtar Aziz with the Lofsa Annual Report 2007

The main function of the new entity, which will be in operation next month, is to drive market development as well as to act as a facilitator to investors seeking to participate in Labuan IBFC.

One of the initiatives planned to advance Labuan as an IBFC is to elevate its status to the “gold standard for holding company jurisdiction”.

“Malaysia's extensive tax treaty network with more than 60 countries and the introduction of a more flexible tax framework support this initiative,” said Zeti.

The offshore banking industry last year reported an expansion in loan assets, complemented by an improvement in the asset quality.

“The total assets of the offshore banks increased 27.8% to US$27bil in 2007 from US$21.1bil in 2006.

“The gross non-performing loans indicator had improved further to 2% in 2007 from 2.8% in 2006,” she said.

The offshore leasing business was one of the highest growing financial industries in Labuan last year.

“Total new lease financing (value) increased by 18.7%, resulting in a cumulative financing of US$14.1bil.

“This is boosted by strong activities on the oil and gas as well as shipping activities in the region,” said Zeti.

Islamic-based assets grew 36.9% to US$1.2bil, she said, adding that there was strong investor interest from the Middle East in the Asian region.

“A major listing on the Labuan International Financial Exchange, which recorded four new listings last year, was the US$1bil sukuk issuance by Saudi Arabia-based Dar Al-Arkan International Sukuk Co,” she said.

For the year ended Dec 31, 2007, Lofsa recorded revenue of RM22.4mil while reserves increased to RM27mil compared with RM20.1mil and RM24.7mil respectively in 2006.

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