MALTA FINANCIAL SERVICES AUTHORITY

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1 QUARTERLY UPDATE MALTA FINANCIAL SERVICES AUTHORITY Deutsche Bank (Malta) Ltd acquires Category 4 Investment Services licence The MFSA issued a Category 4 Investment Services licence to Deutsche Bank (Malta) to provide custody and trustee services for collective investment schemes. The licence will allow the bank to provide asset safe-keeping and monitoring services in relation to transferable securities, units in collective investment schemes, money market instruments and financial derivatives. Deutsche Bank is already licensed as a credit institution in Malta. The availability of such custody services is key to the future development of Malta s financial services sector. Recent events have focused attention on the asset safety aspects surrounding the funds industry and Malta s efficient re-domiciliation procedures, strong regulatory structures and competitiveness have combined to make it more attractive as an EU fund servicing location. This has in turn put pressure on the demand for fund-related services and the MFSA has been working intensively for the past year to ensure wider capacity and choice in this area. The Deutsche Bank Group operates in over 70 countries and is a leading global provider of trust and securities services. The new licence will ensure that Malta will continue to meet the increasing demand for services from its growing community of UCITS and hedge fund managers. It will also continue to extend its global reach as a fund domicile. The Malta International Risk and Insurance Congress The Malta International Risk and Insurance Congress was held during the last week of November. The Congress is a gathering of leading European risk and insurance professionals will be meeting to FIRST QUARTER THE ECONOMIC UPDATE - I

2 discuss the fast changing risk and insurance landscape in Europe and identify the best strategic and tactical locally based funds. Equity funds were the second most common category with a share of 19% of the total response. Major risks, Solvency II, market recovery, global programmes, captives, environmental liability, risk number of funds while derivative funds accounted for 12%. finance and other top issues will all be under the spotlight. The full report on the Analysis of Collective Investment Schemes licensed by the Malta Financial Services Leading insurance industry figures such as Axel Theis, CEO of Allianz Global Corporate & Speciality, Authority may be found under the Publications & Events section on the MFSA website: Eileen McCusker, Chief Executive, International Property & Casualty at XL Insurance, Lex Baugh, President and CEO of Chartis Europe, Daniel San Millan, President of IGREA and Risk Manager at Ferrovial and Carl Leeman of BELRIM and Katoen Naatle, exchanged views with top risk and insurance managers such as Peter den Dekker, President of the Federation of European Risk Management Associations (FERMA) and regulators including Flavia Mazarella, Board Member of CEIOPS, to find answers to some big questions. Premium growth in Insurance Sector On-going expansion and consolidation across the sector last year have delivered sustained levels of growth in the industry despite what proved to be a very difficult year internationally. Figures released by the MFSA Asset Growth in Malta-domiciled funds in November last have confirmed that total premium written by Malta-based insurance companies in 2009 has topped 1 billion. Figures released by the MFSA last October indicate a 13% growth in the Net Asset Value (NAV) of In the non-life insurance sector gross premiums written (GPW) for 2009 grew by 66m to 716m - a 10% investment funds domiciled in Malta during the first six months of last year. This confirms the positive trend increase over the previous year. This increase was made up of a 3% increase in relation to risks situated in seen in the previous 6 months of 2010 which had also seen a growth of 13%. The increase in the net asset Malta (from 93m in 2008 to 96m in 2009) and an 11% increase in relation to risks situated outside of Malta value was contributed by a range of funds which are recovering from the financial crises together with a (from 557m in 2008 to 621m in 2009). number of new funds which started operating in the domicile last year. Total NAV at the end of June 2010 stood at 7.93 billion, after it had declined to around 6 billion at the height of the crisis in June The most substantial increases were however registered in the life insurance sector where GPW climbed from 221m in 2008 to 327m in 2009 (a 48% increase). These figures include investment contracts without The strongest expansion was in the Professional Investor Fund (PIF) segment, despite the significant discretionary participation features (DPF). GPW in respect of commitments where Malta is the country of restructuring that has been taking place in this area to reflect changes in investor appetite. All 51 funds commitment increased by 7% (from 182m in 2008 to 194m in 2009). GPW in respect of commitments licenced by the MFSA in the first six months of 2010 were in fact PIFs. These new licences bring the tally of where Malta is not the country of commitment had increased from 39m to 133m, due to growth in the Professional Investor Funds domiciled in Malta as at the end of June of last year to 331. Another 26 overseas reinsurance sector. funds are authorised to be retailed in Malta. Business done in Malta through branches or agencies of overseas based companies remained at the same Out of 104 Schemes into which the funds are grouped, 72 were Multi-fund structures, 20 stand-alone funds levels as in 2009 that is 127m in respect of general business and 3.5m for long term business. and 12 were Master/Feeder structures. In 2010 new licences have been issued to six insurance companies - including one Protected Cell Company As at June 2010, diversified funds were the largest asset category, accounting for almost 51% of all the II - THE ECONOMIC UPDATE - FIRST QUARTER 2011 (PCC) - bringing the total number of insurance companies operating in Malta to 51. Twelve other insurance FIRST QUARTER THE ECONOMIC UPDATE - III

3 undertakings operate through cells in PCCs. During 2010 various insurance companies have also had their licences extended to cover new classes of business. Following discussions between EUROCLEAR S.A/N.V. and the MFSA, Maltese funds may now be accepted on The Economic Update MFSA Quarterly Update February 2011 GENERAL BUSINESS The Economic Update MFSA Quarterly Update February 2011 the Euroclear FundSettle platform. Representatives from Euroclear s head office in Belgium were in Malta to provide further details on these facilities to fund managers and other investment service providers. FundSettle is a system that facilitates order routing, cash settlement and fund servicing across national, European and international borders. It is used as a settlement platform between fund distributers and transfer agents acting for fund promoters. The platform provides access to over 50,000 funds and 520 transfer agents in 24 domiciles, including Malta. Other services provided by the Euroclear group include clearing, settlement, custody and securities, and borrowing services on different financial instruments. The EU Framework for supervision of the financial system The new EU framework for supervision of the financial system became operational as from the start of Regulations establishing a European Systemic Risk Board (ESRB) adopted by the European Council in November Life LIFE Life 2010, provide a new framework for macro-prudential oversight of the financial system,. Three new supervisory authorities will regulate financial service providers at the micro-prudential level: These include:: The European Supervisory Authority (EBA); The European Insurance and Occupational Pensions Authority (EIOPA); and The European Securities and Markets Authority (ESMA). The four bodies will be part of a European system of financial supervisors, which will include the supervisory authorities of the member states. The ESRB and the EIOPA are located in Frankfurt, the EBA in London and the ESMA in Paris. The European Supervisory Authorities regulations and directives were published in the Official Journal of the EU on December 15, IV - THE ECONOMIC UPDATE - FIRST QUARTER 2011 Following discussions between EUROCLEAR S.A/N.V. and the MFSA, Maltese funds may Following discussions between EUROCLEAR S.A/N.V. and the MFSA, Maltese funds may now be accepted on the Euroclear FundSettle platform. Representatives from FIRST QUARTER THE ECONOMIC UPDATE - V

4 The Malta Financial Services Authority becomes a signatory to the IAIS Multilateral Memorandum of Understanding on Co-operation and Information Exchange The International Association of Insurance Supervisors (IAIS) has accepted the Malta Financial Services Authority (MFSA) application for accession to the Multilateral Memorandum of Understanding (MMoU) on co-operation and information exchange. The MFSA had officially signed the MMoU on the 26th October 2010, after a lengthy application process which involved a thorough screening and scrutiny of Malta s legislative and regulatory framework. This was carried out in order to ensure Malta s compliance with the high standards expected by the IAIS. The assessment focused special attention on the MFSA s ability to co-operate and exchange information with overseas regulatory agencies under strict conditions of confidentiality. Membership of the IAIS and accession to the MMoU shall strengthen the MFSA s position in the international network of supervisory agencies in the sector. It means that the MFSA is now a party to an additional formal framework for international co-operation and exchange of information in insurance regulatory and supervisory matters with a network of over 190 jurisdictions worldwide. The MFSA is already a signatory to the IOSCO and CESR MMoUs in the securities field. Membership in the IAIS further enhances Malta s prestige and reputation as a leading financial services jurisdiction with a strong legislative and regulatory framework in place. The IAIS was established in 1994 with the aim of establishing sound insurance markets and contributing to international financial stability. It issues global insurance principles, standards and guidance papers, provides training and support on issues related to insurance supervision, and organises meetings and seminars for insurance supervisors. The IAIS also works closely with other financial sector standard setting bodies and international organisations to promote financial stability. VI - THE ECONOMIC UPDATE - FIRST QUARTER 2011 LICENCES: October December 2010 NEW LICENCES ISSUED Investment Services Category 1B Investment Services Licences issued to Delta Exotics Limited. Category 1B Investment Services Licences issued to Upperview Financial Advisors Limited. Category 2 Investment Services Licences issued to COMAC Capital (Europe) Limited. Category 2 Investment Services Licences issued to Stoneworks Asset Management (Malta) Limited. Category 2 Investment Services Licences issued to Numen Investments Limited. Category 2 Investment Services Licences issued to SphereInvest Group Limited. Category 2 Investment Services Licences issued to Malta Capital Management Limited. Category 2 Investment Services Licences issued to CIE Management IXM Limited. Category 4 Investment Services Licences issued to Deutsche Bank (Malta) Limited. Revised Investment Services Licences Licence issued to Vector Commodity has been revised within the same Category 2. Recognised Fund Administrators Certificate issued to Heritage International Fund Managers (Malta) Limited. Certificate issued to Amicorp Fund Services Malta Limited. Collective Investment Scheme Licences Professional Investor Funds targeting Qualifying Investors Collective Investment Scheme licence issued to Shelter IslandSICAV plc in respect of two sub-funds. Collective Investment Scheme licence issued to Ananea Funds Collective Investment Scheme licence issued to Resco Funds Collective Investment Scheme licence issued to JW Partners SICAV Collective Investment Scheme licence issued to Psi Capital SICAV Collective Investment Scheme licence issued to Innocap Fund SICAV plc in respect of five sub-funds. Collective Investment Scheme licence issued to EYRY IV Fund Collective Investment Scheme licence issued to LL Global Fund Series Collective Investment Scheme licence issued to EOS SICAV plc in respect of one sub-fund. Collective Investment Scheme licence issued to NBCG Fund Collective Investment Scheme licence issued to Solar Investments Fund Collective Investment Scheme licence issued to Mansard Capital Collective Investment Scheme licence issued to Orange Capital Funds Collective Investment Scheme licence issued to Novium Opportunity Umbrella Collective Investment Scheme licence issued to Willer Opportunities (Malta) SICAV Ltd in respect of one sub-fund. Collective Investment Scheme licence issued to NEF Funds SICAV Collective Investment Scheme licence issued to Accuris Funds Collective Investment Scheme licence issued to Hamble Investment Funds Professional Investor Funds targeting Experienced Investors Collective Investment Scheme licence issued to LL Global Fund Series Collective Investment Scheme licence issued to JFP Investments SICAV Limited in respect of one sub-fund. Professional Investor Funds targeting Extraordinary Investors Collective Investment Scheme licence issued to CTH SICAV plc in respect of one sub-fund. UCITS Collective Investment Scheme licence issued to Capital Strategy Funds FIRST QUARTER THE ECONOMIC UPDATE - VII

5 Insurance Business Licences Licence issued to Cafina Assurances Limited to carry on business of insurance in respect of one class of General Business of insurance. Licence issued to St Julians Insurance Company Limited to carry on business of insurance in respect of one class of General Business of insurance. Licence issued to Ortolan Reinsurance Company Limited to carry on business of reinsurance in respect of a number of classes of General Business of insurance. Licence issued to AarhusKarlshamn Insurance Malta Limited to carry on business of affiliated reinsurance in respect of a number of classes of General Business of insurance. Insurance Brokers Enrolment in the Brokers List was granted to MAX Insurance Brokers Ltd. Cell Companies Licences Ocado cell has been approved as a cell of Atlas Insurance PCC. South Risk Management Cell has been approved as a cell of Abacus Risk Management Services PCC Ltd. Revised Insurance Business Licences A revised licence was issued to Multi Risk Benefits Limited to carry on business of reinsurance only. Trusts and Trustees Authorisation issued to Primei Fiduciary Ltd to receive property under trusts and to act as a trustee or co-trustee in terms of the Trusts and Trustees Act. Authorisation issued to STM Malta Trust and Company Management Limited to receive property under trusts and to act as trustee or co-trustee in terms of the Trusts and Trustees Act. Authorisations issued to Amicorp Malta Limited to act as an administrator of private foundations and to act as trustee or co-trustee both in terms of the Trusts and Trustees Act. Authorisation issued to W&D Fiduciary Services Ltd to provide fiduciary services which do not include acting as trustee in terms of the Trusts and Trustees Act. Authorisations issued to Heritage Corporate Services ( Malta) Ltd to receive property under trusts and to act as a trustee or co-trustee in terms of the Trusts and Trustees Act. Pensions Retirement Schemes Certificate of Registration issued to STM Malta Retirement Plan. Certificate of Registration issued to The Providence Retirement Plan. Scheme Administrator Certificate of Registration issued to STM Malta Trust and Company Management Limited. LICENCES SURRENDERED Collective Investment Schemes Professional Investment Funds Surrender of licence issued to NBCG Fund SICAV plc in respect of 44 sub-funds. Surrender of licence issued to Swiss Investment Funds Surrender of licence issued to Alphabetos International Funds SICAV plc in respect of four sub-funds. Surrender of licence issued to FMG Funds SICAV plc in respect of three sub-funds. Non UCITS Surrender of licence issued to HSBC Structured Funds Surrender of licence issued to HSBC Malta Funds SICAV plc in respect of two sub-funds. Private Scheme Surrender of licence issued to Pulse SICAV Limited. Investment Services Surrender of Category 2 licence issued to Lombard Asset Managers Limited. Issued by the Communications Unit, Malta Financial Services Authority: communications@mfsa.com.mt VIII - THE ECONOMIC UPDATE - FIRST QUARTER 2011