MACAU SAR, CHINA Law and Practice Contributed by: Carlos Eduardo Coelho, MdME
3.2 Fronting Fronting is specifically permitted for general insurers in Macau. According to AMCM Notice 004/2021 “Requirements of Guaranteeing Technical Reserves due to Abnor- mally High Loss or Fronting Policy”, a Macau general insurer may underwrite insurance business through fronting policies. A fronting policy is defined under this AMCM guideline as the agreement pursuant to which the ceding company (Macau licensed insurer) transfers the risks that it has underwritten to a rein - surer, keeping no more than 5% of such risk on its own behalf. In situations where a fronting policy is put in place, the Macau licensed insurer must require prior approval from the regulator if it wishes to guarantee the tech- nical reserve with the retained portion (ie, the capital insured minus the amount of reinsurance ceded). Sev- eral requirements regarding the approval request and the reinsurance company are also applicable. 4. Transaction Activity 4.1 M&A Activities Relating to Insurance Companies M&A activities relating to insurance companies are not common in Macau; there have been only two (indi- rect) acquisitions of the whole shareholding of Macau insurance companies in the last few years. Qualified Shareholding Under the MIO, prior approval from the AMCM is required for a direct or indirect acquisition or increase of a qualified shareholding. As defined in the MIO, a qualified shareholding generally means a shareholding of any shareholder that represents, directly or indi- rectly, at least 10% of the share capital or the voting rights of the insurer, or that, in any other way, bestows the possibility of exercising a significant influence on the respective management. In addition, any subsequent and cumulative increase of more than 5% of qualified shareholding or voting rights must similarly be approved by the AMCM. An acquisition or increase of a qualified shareholding
• acquire immovable property other than what is indispensable for their installation and operation. 2.3 Taxation of Premium Insurance contracts are subject to stamp duty, which is calculated and levied from the customers by the insurers and submitted to the Macau Tax Bureau by the insurer on a monthly basis, pursuant to Article 24 of Decree Law No 17/88/M, amended by Law No 24/2020. Nevertheless, such stamp duty has been exempted as an annual tax benefit in the Macau Annual Budget Law over recent years (from 2006 onwards, including for 2026). 3. Overseas Firms Doing Business in the Jurisdiction 3.1 Overseas-Based Insurers or Reinsurers Overseas-based insurers or reinsurers are not permit- ted to conduct insurance or reinsurance business in Macau, unless they are authorised to do so. However, there are no limitations on overseas-based insurers or reinsurers accepting Macau residents or compa- nies taking out insurance or reinsurance in a differ- ent jurisdiction of their own volition, provided that the overseas-based insurers or reinsurers have not actively promoted their services and/or marketed their products in Macau. Overseas insurers or reinsurers have to go through a licensing process in order to be allowed to carry out insurance or reinsurance business in Macau, with the only exception being the acceptance of specific insurance products as stipulated under Article 6 of the MIO. Please see 2.2 Writing of Insurance and Reinsurance regarding the admissible exceptions for overseas- based reinsurers. There is no recognition of overseas licences through passporting or an equivalent process in Macau.
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