Extension of Eligibility for the GAPEE Framework and Its Impact on the Insurance and Securitisation Sectors
In December 2023, the Accountancy Profession (General Accounting Principles in respect of certain Eligible Entities related to the business of Insurance) Regulations (the “Regulations”) were introduced with the aim of allowing certain (re) insurance companies an opt-out from IFRS 17 and the ability of adopting a local accounting framework laid out in the said Regulations (“GAPEE”).
By way of Legal Notice 299 of 2025, the list of eligible entities which can benefit from the Regulations was extended to include: (i) insurance and or risk transferee vehicles; (ii) insurance and/or reinsurance parent undertakings; and (iii) risk transferee vehicle parent undertakings.
Risk transferee vehicles are defined in the Regulations as a reinsurance special purpose vehicle (which includes standalone RSPVs and RSPV SCCs) or a securitisation vehicle or a licensed special purpose vehicle.
This amendment is a recognition that the adoption of the more complex and resource-intensive IFRS 17 framework may not be appropriate and does not necessarily serve its purpose in the context of RSPVs, RSPV SCCs, securitisation vehicles and licensed special purpose vehicles, as well as their parent undertakings. The amendments deliver a significant benefit to the insurance-linked securitisation (ILS) sector by materially reducing compliance and administrative burdens for Malta-based RSPVs and RSPV SCCs through the introduction of a more accessible, proportionate, and functional GAPEE framework.
The amendments have been worded to the effect that if either of the above-mentioned vehicles enter into a transaction which falls within the definition of a (re)insurance transaction, then the said entities may opt for the application of GAPEE rather than IFRS17.
The amendments to the Regulations complement Malta’s selling points when it comes to ILS transactions. These new amendments will not only facilitate the off-loading of risks by (re)insurance companies to different vehicles and using different risk mitigation strategies (rather than limiting themselves to the traditional methods of reinsurance/retrocession) but also cement Malta’s position when it comes to offering of securities.
