27 April 2010
KUALA LUMPUR-- AirAsia Bhd's wholly-owned subsidiary AirAsia Corporate Services Ltd (AACSL) has received approval from the Labuan Financial Services Authority (FSA) to carry on Labuan captive insurer business.
AirAsia said AACSL, which was incorporated in Labuan, had received approval to carry on the captive insurance business in, from or through the Federal Territory of Labuan.
In a filing with Bursa Malaysia Securities, it said the approval is subject to among others AACSL making a payment of the requisite licence fee to Labuan FSA, and the provision of evidence that a working fund of RM300,000 or its equivalent in any foreign currency has been deposited with a bank in Labuan.
Following the approval, AACSL will now be able to insure and reinsure all of the risks within the AirAsia Group, it added.
AirAsia said the primary purpose of establishing the Labuan captive insurance business was to provide access for the company to commercial insurance markets and provide flexibility in managing and retaining its own risks.
With the establishment of the business, AirAsia said it will have a choice of which risks and how much risk the company intends to retain within the group, thus simultaneously giving greater flexibility in managing its risks.
It said the business will have inherent tax and investment advantages and offered AirAsia an opportunity to set up a profit centre within its group following the exemption order to the Insurance Act 1996 by Labuan FSA.
This enables the Labuan captive insurance business to directly insure AirAsia's international aviation, maritime and liability risks.
AirAsia is also paying its insurance premium to the Labuan captive insurance business instead of paying through local insurers.
With enough fund, the business is expected to transfer some of its fund to AirAsia through the payment of dividends, it said.