Singapore, 28 November 2003... The Monetary Authority of Singapore (MAS) today released a consultation paper on the proposed risk-based capital framework for insurance business and invites public comments.

2   Insurance companies are facing greater challenges in their businesses, particularly in terms of volatility of assets and diversity of insurance risks, as well as keener competition from other financial institutions. While the existing statutory solvency framework has served its purpose well, it is not transparent or risk-focused enough to reflect the true financial conditions of insurance companies in the new environment.

3   To address these inadequacies, MAS proposes to adopt a risk-based capital (RBC) framework, which was formulated in close consultation with insurance practitioners and representatives from the actuarial and accounting professions.

4   The proposed risk-focused framework is based on emerging international standards and good practices in developed countries. It reflects the relevant risks that the insurance companies face. The minimum capital prescribed under the framework, which includes a consistent approach to the valuation of assets and liabilities, will serve as an effective buffer to absorb losses. With greater transparency, it will facilitate comparisons across insurance companies and provide clearer information on the financial strength of insurers. This will facilitate early and effective intervention by MAS, if necessary. Under the new framework, the requirements have been aligned across financial institutions as far as possible to minimize capital arbitrage in an increasingly integrated financial landscape.

5   This consultation paper seeks to obtain feedback on operational details, the draft regulations, notices and guidelines relating to the new RBC framework for insurance companies.

6   The consultation paper is posted on the MAS website www.mas.gov.sg and comments should reach MAS by 9 January 2004. Interested parties may email their comments to rbccon03@mas.gov.sg . 

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For the entire consultation paper, please go to our web site:

http://www.mas.gov.sg -> Publications -> MAS Consultation Papers -> Consultation Paper on the Proposed Risk-based Capital Framework for Insurance Business (1.01 MB)