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MAS proposals widen investment scope for Singapore insurers 

July 26, 2016

Kit Yin Boey, Reuters

Insurance companies in Singapore will face less onerous restrictions to invest in bonds and equities under new rules that the Monetary Authority of Singapore has proposed.

The draft risk-based capital framework, which has been in the works for four years, is the insurance equivalent of the Basel III regime for banks. It aims to improve risk coverage and to assess capital adequacy better than the current 2005 framework.

"The biggest impact on insurers would be the widening of the eligibility criteria for matching adjustment," said Sally Yim, Moody's senior vice president for the Asia financial institutions group. "This is favourable for insurers as the proposed relaxed criteria would make it easier for insurers to perform their asset-liability management."

The matching adjustment mechanism was introduced in a consultation paper two years ago as a calculation to balance life insurance liabilities against assets denominated in both Singapore dollars and US dollars, but the market felt that the proposed conditions were too conservative and too narrow. Read more

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