Front Matter Page

IMF Country Report No. 19/348

MALTA

FINANCIAL SECTOR ASSESSMENT PROGRAM

TECHNICAL NOTE—INSURANCE AND SECURITIES SECTOR SUPERVISION

November 2019

This Technical Note on Insurance and Securities Sector Supervision for Malta was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed in November 2019.

Copies of this report are available to the public from

International Monetary Fund • Publication Services

PO Box 92780 • Washington, D.C. 20090

Telephone: (202) 623–7430 • Fax: (202) 623–7201

E-mail: publications@imf.org Web: http://www.imf.org

Price: $18.00 per printed copy

International Monetary Fund

Washington, D.C.

© 2019 International Monetary Fund

Front Matter Page

MALTA

FINANCIAL SECTOR ASSESSMENT PROGRAM

TECHNICAL NOTE

INSURANCE AND SECURITIES SECTOR SUPERVISION

November 6, 2019

Prepared By

Monetary and Capital Markets Department

This Technical Note was prepared by an IMF external expert in the context of the Financial Sector Assessment Program (FSAP) in Malta during September 10–26, 2018, overseen by the Monetary and Capital Markets Department, IMF. The note contains technical analysis and detailed information underpinning the FSAP’s findings and recommendations as of September 2018. Further information on the FSAP program can be found at http://www.imf.org/external/np/fsap/fssa.aspx.

Contents

  • Glossary

  • EXECUTIVE SUMMARY

  • OBJECTIVE AND SCOPE

  • MARKET OVERVIEW AND KEY TRENDS

  • A. Insurance Sector

  • B. Securities Sector

  • C. Key Risks and Vulnerabilities

  • SUPERVISORY STRUCTURE AND INSTITUTIONAL ARRANGEMENTS

  • A. Current Supervisory Architecture

  • B. Mandates and Legal Powers

  • C. Governance and Transparency

  • D. Operational and Financial Independence

  • E. Confidentiality Safeguards and Legal Protection

  • F. Supervisory Coordination and Cooperation

  • SUPERVISORY FRAMEWORK AND RESOURCES

  • A. Background Context

  • B. Risk-Based Supervision and Macroprudential Surveillance

  • C. Supervisory Capacity

  • BOXES

  • 1. Global Insurance Market – 2017

  • FIGURES

  • 1. Investment Funds—Net Asset Value by Asset Allocation, 2017

  • 2. Investment Intermediaries by Category of License, June 2018

  • TABLES

  • 1. Insurance Market Structure

  • 2. Domestic Insurers, end-2017

  • 3. Analysis of Gross Written Premiums, 2017

  • 4. Insurers’ Asset Portfolios, end-2017

  • 5. Solvency Position of Insurer

  • 6. Investment Funds

  • 7. Analysis of Supervisory Resources

  • APPENDIX

  • I. MFSA’s Supervision and Enforcement Units

Glossary

AIF

Alternative Investment Fund

AUM

Asset under Management

AM L/C FT

Anti-Money Laundering/Combating the Financing of Terrorism

CBM

Central Bank of Malta

CEO

Chief Executive Officer

CIS

Collective Investment Scheme

CSU

Conduct Supervision Unit

DG

Director General

DIF

Domestic Investment Fund

ECB

European Central Bank

EIOPA

European Insurance and Occupational Pensions Authority

ESA

European Supervisory Authority

ESMA

European Securities and Markets Authority

ESRB

European Systemic Risk Board

ETF

Exchange Traded Fund

EU

European Union

EWSM

European Wholesale Securities Market

FIAU

Financial Intelligence Analysis Unit

FI

Financial Institution

FinTech

Financial Technology

FM Act

Financial Markets Act

FST

Financial Services Tribunal

FTE

Full-Time Equivalent

GDP

Gross Domestic Product

GWP

Gross Written Premium

IA Act

Insurance Intermediary Act

IAU

Internal Audit Unit

IB Act

Insurance Business Act

IB(GPS)R

Insurance Business (General Provisions of Supervision) Regulation

IFSM

Institutional Financial Securities Market

IOSCO

International Organization of Securities Commissions

IPSU

Insurance & Pension Supervision Unit

IS Act

Investment Services Act

ISA(SR)R

Investment Services Act (Supervisory Review) Regulation

JFSB

Joint Financial Stability Board

MCR

Minimum Capital Requirement

MFI

Monetary Financial Institution

MFIN

Ministry of Finance

MFSA

Malta Financial Services Authority

MiFID

Markets in Financial Instruments Directive

MoU

Memorandum of Understanding

MSE

Malta Stock Exchange

NAV

Net Assets Value

NCA

National Competent Authority

NFC

Nonfinancial Corporation

ORSA

Own Risk and Solvency Assessment

PCC

Protected Cell Company

PIF

Professional Investment Fund

RAF

Risk Assessment Framework

RBSF

Risk-Based Supervision Framework

RDU

Regulatory Development Unit

RMS

Risk Monitoring System

ROC

Registry of Companies

RQC

Risk Quantitative Criteria

SCR

Solvency Capital Requirement

SMSU

Securities Market Supervision Unit

SPV

Special Purpose Vehicle

SRP

Supervisory Review Process

TCR

Total Composite Risk rating

TIR

Total Impact Rating

TPR

Total Probability Rating

UCITS

Undertakings for the Collective Investment of Transferable Securities

UK

United Kingdom

ULP

Unit-Linked Policy

US

United States

YoY

Year-on-Year

Malta: Financial Sector Assessment Program-Technical Note-Insurance and Securities Sector Supervision
Author: International Monetary Fund. Monetary and Capital Markets Department