Singapore MAS Releases List of Domestic Systemically Important Insurers in Singapore & Subject to Additional Supervisory Measures Including 25% Capital Add-on Effective 1st January 2024 – 4 Insurers are AIA, Income Insurance, Prudential & Great Eastern Life
23rd September 2023 | Hong Kong
Singapore central bank Monetary Authority of Singapore (MAS) has released an inaugural list of domestic systemically important insurers (D-SIIs) in Singapore, which are subjected to additional supervisory measures including 25% capital add-on effective 1st January 2024. The 4 insurers are AIA, Income Insurance, Prudential and Great Eastern Life. Singapore MAS: “The D-SII framework will come into effect on 1 January 2024. It formalises and updates an existing framework, and will facilitate the annual impact assessment of insurers based on their size, interconnectedness, substitutability and complexity. Insurers whose failures are assessed to have a significant impact on the financial system and broader economy in Singapore will be formally designated as D-SIIs and subject to additional supervisory measures. These measures largely mirror those applicable to domestic systemically important banks (D-SIBs).” More info below:
“ Singapore MAS Releases List of Domestic Systemically Important Insurers in Singapore & Subject to Additional Supervisory Measures Including 25% Capital Add-on Effective 1st January 2024 – 4 Insurers are AIA, Income Insurance, Prudential & Great Eastern Life “
Ho Hern Shin, Deputy Managing Director (Financial Supervision), MAS: “Enhancing the D-SII framework is part of MAS’ continuous efforts to strengthen the resilience of Singapore’s financial sector. It ensures that domestic systemically important insurers are subject to higher regulatory standards and closer supervision.”
Singapore MAS Releases List of Domestic Systemically Important Insurers in Singapore & Subject to Additional Supervisory Measures Including 25% Capital Add-on Effective 1st January 2024
21 September 2023 – The Monetary Authority of Singapore (MAS) today published its framework for designating domestic systemically important insurers (D-SIIs), and the inaugural list of four D-SIIs:
- AIA Singapore Private Limited
- Income Insurance Limited
- Prudential Assurance Company Singapore (Pte) Limited; and
- The Great Eastern Life Assurance Company Limited.
The D-SII framework will come into effect on 1 January 2024. It formalises and updates an existing framework [1] , and will facilitate the annual impact assessment of insurers based on their size, interconnectedness, substitutability and complexity. Insurers whose failures are assessed to have a significant impact on the financial system and broader economy in Singapore will be formally designated as D-SIIs and subject to additional supervisory measures [2] . These measures largely mirror those applicable to domestic systemically important banks (D-SIBs) [3] and include:
- Higher capital requirements – A 25% capital add-on will apply, increasing a D-SII’s higher and lower supervisory intervention levels, as well as Common Equity Tier 1 (CET1) and Tier 1 capital requirements [4] . This add-on replaces the 25% high impact surcharge applicable to the four D-SIIs under the existing framework.
- Recovery and resolution preparedness – Recovery planning will bolster an insurer’s ability to restore its financial strength and viability in a period of distress. Resolution planning will enhance MAS’ ability to ensure the timely and orderly restructuring or exit of an insurer if it fails, so as to minimise impact to the financial system and economy.
Given their current capital positions, the four D-SIIs are expected to continue meeting the capital requirements under the D-SII framework with adequate buffers. MAS has also been engaging the four D-SIIs on recovery planning.
More information on the D-SII framework, including the process for designating D-SIIs, can be found here . MAS’ response to feedback received from the public consultation on the D-SII framework can be found here .
Notes:
- [1] The existing framework is set out under Section 4 of MAS’ Framework for Impact and Risk Assessment of Financial Institutions: https://www.mas.gov.sg/-/media/MAS/News-and-Publications/Monographs-and-Information-Papers/Monograph–MAS-Framework-for-Impact-and-Risk-Assessment.pdf
- [2] The criteria for assessing systemic impact of insurers, as well as the policy measures for D-SIIs are aligned with the International Association of Insurance Supervisors’ Holistic Framework for Systemic Risk in the Insurance Sector: https://www.iaisweb.org/uploads/2022/01/191114-Holistic-Framework-for-Systemic-Risk.pdf ; and the expectations under Financial Stability Board’s Key Attributes of Effective Resolution Regimes for Financial Institutions: https://www.fsb.org/wp-content/uploads/r_141015.pdf
- [3] The D-SIB framework can be found in Appendix 1 to MAS’ Framework for Impact and Risk Assessment of Financial Institutions: https://www.mas.gov.sg/-/media/MAS/News-and-Publications/Monographs-and-Information-Papers/Monograph–MAS-Framework-for-Impact-and-Risk-Assessment.pdf
- [4] CET1 capital represents the highest quality capital. Examples of CET1 capital include paid-up capital, retained earnings and insurance funds surpluses etc. Tier 1 capital comprises CET1 capital and Additional Tier 1 capital instruments.
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