Singapore, 20 December 2002... An MAS-led workgroup on general insurance today issued a discussion paper and held an industry briefing on developing a risk-based capital framework for the industry. The proposed framework addresses asset risks that are not reflected in the existing capital framework of general insurance companies and refines the allowance for liability and concentration risks.

2   The risk-based capital workgroup was established in April 2002 to review the asset valuation and solvency requirements of general insurance business in Singapore. The workgroup, which is chaired by MAS, comprises representatives of the Singapore Actuarial Society, the General Insurance Association of Singapore (GIA), the Singapore Reinsurers Association, and the Institute of Certified Public Accountants of Singapore (ICPAS).

3   The proposed framework recommended by the workgroup aims to align prudential requirements with the global trend of adopting risk-adjusted capital requirements and transparent valuation method. The new capital requirements would also serve as an effective early warning indicator of financial strength and facilitate progressive intervention by insurance companies and regulators.

4   To fine-tune the framework, the workgroup solicits feedback from the industry. Industry comments are to reach MAS by 14 Feb 2003. The workgroup will conduct thorough testing of the proposed framework and thereafter, make appropriate modifications where necessary.

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For the entire discussion paper proposed by the workgroup, you can go to the following URL to access it:

www.mas.gov.sg -> Singapore's Financial Sector -> Reports and Consultation Papers