Labuan International Business and Financial Centre (IBFC) closed 2025 with gross insurance premiums of US$2.5 billion, extending its run as a Southeast Asian reinsurance hub through one of the region's heaviest catastrophe years on record, according to the Labuan Financial Services Authority's Market Report 2025.
Gross premiums and contributions income rose 5.8% on the year, lifted by growth across both general and life segments, with the former up 6.1% and the latter advancing 4.6%.
The general sector did most of the heavy lifting, clearing the US$2 billion threshold on the back of reinsurance and captive activity. The Centre now hosts 232 insurers and intermediaries, including 36 reinsurers, alongside a general retakaful operator and a family retakaful operator.
General reinsurance stood out as the year's strongest performer. Gross premiums in general insurance climbed 5.5% to US$1.1 billion, with the reinsurance segment alone expanding 12.1%. Reinsurance accepted accounted for 87.1% of general insurers' business, while net retention edged up to 62.7%.
Underwriting profitability narrowed, however, with the margin easing to 10.4% from 15.9% a year earlier as the claims ratio rose to 56.2%, dragged higher by Malaysian fire losses. The strain appears to sit at the reinsurance layer rather than the primary book.
Persatuan Insurans Am Malaysia, the country's general insurance association, reported a combined ratio of 67.3% in fire insurance in the first half of 2025, pointing to a profitable direct portfolio and suggesting that the volatility ceded to Labuan is concentrated in larger industrial risks.
Fire is Malaysia's second-largest general line, contributing RM2.6 billion, or 21.1%, of the country's general insurance portfolio in the first half, the association said. Investment income offset some of the underwriting drag, climbing 77.3% to US$114.3 million.
Labuan's reinsurers absorbed exposures from a long list of regional events, including the Cebu earthquake, typhoons Crising, Bualoi, Tino and Ragasa across the Philippines and China, Cyclone Ditwah in Sri Lanka and Hurricane Melissa in Jamaica.
Floods in Malaysia, Indonesia, the United Arab Emirates and Thailand, earthquakes in Thailand, Myanmar and Tainan, and Typhoon Danas in Taiwan added to the load.
The regional protection gap remains stark. In figures previously reported, Aon's 2026 Climate and Catastrophe Insight estimated US$76 billion in economic losses across Asia-Pacific in 2025, of which only around US$7 billion was insured. The 7.7-magnitude Myanmar earthquake alone generated close to US$16 billion in economic losses.
The Centre continues to operate in the shadow of Singapore, which a Chambers and Partners practice guide describes as the insurance and reinsurance hub of Asia and the region's specialty center, with 29 catastrophe bonds issued as of November 2025.
Premium placements by Labuan brokers grew an average 7.7% a year to US$1.5 billion in 2025, led by general reinsurance and retakaful.
Under Malaysia's commitments to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, Labuan re/insurers gained permission to underwrite Malaysian product liability cover from Feb 18, 2025, with directors and officers liability access set for Nov 29, 2027. Sector profitability rose 7.1% to US$434.7 million.
