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Singapore names ‘too big to fail’ insurers
MAS to enforce higher capital requirements for those designated as domestic systemically important insurers
Tom King 22 Sep 2023

The Monetary Authority of Singapore (MAS) has published its maiden list of domestic systemically important insurers (D-SIIs) together with a new framework for designating such insurers.

The inaugural list of D-SIIs includes AIA Singapore Private Limited, Income Insurance Limited, Prudential Assurance Company Singapore (Pte) Limited; and The Great Eastern Life Assurance Company Limited.

The new D-SII framework, which comes into effect on January 1 2024, formalizes and updates an existing framework, and facilitates 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 correspond to those applicable to domestic systemically important banks (D-SIBs) and can 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. This add-on replaces the 25% high-impact surcharge applicable to the four D-SIIs under the existing framework.

According to the MAS, 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.

The move to name the “too big to fail” insurers mirrors the MAS’s action in 2015 when it announced its list of “too big to fail” D-SIBs.

Ho Hern Shin, MAS deputy managing director (financial supervision), says: “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.”

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