The Labuan International Business and Financial Centre (Labuan IBFC) records a 7.2% rise in captive insurance gross premiums to US$726 million in 2025, with the sector attracting 10 new entrants including seven protected cell company (PCC) cells, according to the centre's latest Market Report released by the Labuan Financial Services Authority (Labuan FSA). The captive segment now accounts for 36% of total premiums underwritten by Labuan's insurance industry. The total number of captives stands at 69, comprising 32 pure captives, 22 rent-a-captives, 14 protected cell companies (with 36 PCC cells) and one takaful captive. Asia-Pacific remains the primary market segment, with Indonesia and Japan together accounting for 58.1% of captive premiums underwritten in the region. Malaysian and non-Malaysian business contribute US$307.6 million and US$418.4 million respectively to the segment's gross premiums. By class of business, engineering and contractors' all risks dominate at 33.8% of the captive book, followed by liability (26.8%), fire (10.1%), marine (6%), cyber liability (3.6%) and aviation (3.5%). The growing share of cyber liability cover aligns with the Labuan IBFC Strategic Roadmap 2022-2026, which encourages the use of captives to manage emerging risk exposures. Despite the top-line growth, the sector posts mixed financial results. Captive earned premiums rise to US$421.8 million, but net claims incurred climb 52.6% to US$251.5 million. The underwriting margin declines 25.1% to US$160.1 million from US$213.8 million in 2024, while investment income increases 11.5% to US$11.7 million. Overall captive profitability moderates by 20.2%, which the report attributes to elevated claims experience. Net retention in the captive sector eases to 56.5% from 58.6% a year earlier, reflecting changes in reinsurance strategy by some captives. The Market Report highlights the MADANI Captive Insurance Programme, introduced under Malaysia's 2026 Budget, as a development reinforcing captive insurance's place in the country's financial architecture. The programme draws on Labuan structures including pure captives, association captives and PCCs to support risk financing for national priorities. Labuan FSA also issues a Handbook on Captain-Tech and TakaCapt-Tech Innovations during the year, providing guidance for captives on integrating data analytics, artificial intelligence, automation and digital platforms into underwriting, risk modelling, claims management and regulatory reporting. Affendi Rashdi, director general of Labuan FSA, says: "Labuan FSA remains vigilant to the implications of the evolving conflict in the Middle East, particularly its effects on energy markets, trade flows and investor sentiment." He adds that "ASEAN remains a natural source of opportunity for Labuan IBFC", pointing to intra-regional infrastructure financing and energy connectivity projects, including the ASEAN Power Grid, as areas where the centre can act as a bridging market. Looking ahead to 2026, Labuan FSA identifies deepening the insurance sector as a priority, including managing general agents, brokers and the MADANI captive. Other focus areas include enhancing digital finance frameworks and strengthening capital adequacy regulation for takaful and banking. The captive momentum comes as Labuan IBFC marks its 35th anniversary. The wider centre records total industry assets of US$94 billion (up 13%), issues 41 new licences and makes its debut in the Global Financial Centres Index. Malaysia's placement under "Regular Follow-Up" status following its Financial Action Task Force Mutual Evaluation also reinforces the centre's regulatory standing.
