MFSA proposal for Reinsurance Special Purpose Vehicles (RSPV)

The Malta Financial Services Authority (MFSA) has undertaken a consultation process concerning a proposal to establish a legal framework catering for the formation and domicile of Reinsurance Special Purpose Vehicles (RSPV) in Malta. The proposal targets insurance-linked securities (ILS), catastrophe bonds and the reinsurance convergence sector. The MFSA aims to have the RSPV legislation in place by the end of 2013.
RSPVs tend to provide increased reinsurance capacity and facilitate alternative risk transfer, enabling insurance and reinsurance undertakings to better arrange their risk profile in line with their risk tolerance. Once the regulation is fully in force, it would be possible for RSPVs to be authorized, formed, domiciled and regulated in Malta. Malta would also be able to attract reinsurance sidecars and hedge funds which intend to enter the reinsurance business. The way forward for Malta would be to establish itself as a suitable jurisdiction for RSPVs amidst competition from other reputable domiciles.