14. The First to Seventh Schedules to the principal Regulations are deleted and the following Schedules substituted therefor:1. The total risk requirement of an adjusted fund of an insurer, or (in the case of a licensed insurer incorporated in Singapore) arising from assets and liabilities of an insurer that do not belong to any insurance fund established and maintained by the insurer under the Act (including assets and liabilities of any of the insurer’s branches located outside Singapore) is to be calculated in accordance with MAS Notice 133 and comprises the following components:(a) | Component 1 (C1) requirement relating to insurance risks of the insurer’s life and general businesses; | (b) | Component 2 (C2) requirement relating to market risks, credit risks and risks arising from the mismatch, in terms of interest rate sensitivity and currency exposure, of the assets and liabilities of the insurer; | (c) | the risk requirement relating to operational risk of the insurer as described in MAS Notice 133. |
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2. The total risk requirement of a licensed insurer is the aggregate of the total risk requirements of every adjusted fund of the insurer and, where the insurer is a licensed insurer incorporated in Singapore, the total risk requirement arising from assets and liabilities of the insurer that do not belong to any insurance fund established and maintained by the insurer under the Act (including assets and liabilities of any of the insurer’s branches located outside Singapore). |
3. In the case of a licensed insurer incorporated in Singapore, in determining the total risk requirement arising from assets and liabilities of an insurer that do not belong to any insurance fund established and maintained by the insurer under the Act, the value of such assets and liabilities (including that arising from insurance business) is to be determined in accordance with Parts IV and V of these Regulations. |
types of insurance business |
1. Business concerned with investment‑linked policies only. |
2. Business concerned with short‑term accident and health policies only. |
1. In this Schedule —“net claims incurred” means the sum of —(a) | the net claims settled in an accounting period; and | (b) | the claim liabilities (net of reinsurance) at the end of the accounting period less the claim liabilities (net of reinsurance) at the beginning of the accounting period; |
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“net premiums earned” means the sum of —(a) | the net premiums written in an accounting period; and | (b) | the premium liabilities (net of reinsurance) at the beginning of the accounting period less the premium liabilities (net of reinsurance) at the end of the accounting period; |
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“threshold amount” —(a) | in relation to the contingency reserves for an accounting period for a mortgage insurer, means 400% of the highest of the following amounts:(i) | the amount of the net premiums written for that accounting period; | (ii) | the amount of the net premiums written for the preceding accounting period; | (iii) | the amount of the net premiums written for the accounting period preceding the accounting period referred to in sub‑paragraph (ii); and |
| (b) | in relation to the contingency reserves for an accounting period for a trade credit insurer, means 150% of the highest of the following amounts:(i) | the amount of the net premiums written for that accounting period; | (ii) | the amount of the net premiums written for the preceding accounting period; | (iii) | the amount of the net premiums written for the accounting period preceding the accounting period referred to in sub‑paragraph (ii); | (iv) | the amount of the net premiums written for the accounting period preceding the accounting period referred to in sub‑paragraph (iii); | (v) | the amount of the net premiums written for the accounting period preceding the accounting period referred to in sub‑paragraph (iv). |
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Contingency reserves requirement for mortgage insurer |
2.—(1) At the end of each accounting period and subject to sub‑paragraphs (6) and (7), a mortgage insurer must transfer to the contingency reserves 50% of the net premiums earned in that period in respect of mortgage insurance policies.(2) Subject to sub‑paragraphs (3) and (4), any transfer to the contingency reserves may be withdrawn —(a) | at the end of an accounting period; and | (b) | to the extent that the net claims incurred by the insurer in respect of mortgage insurance policies exceed 35% of the net premiums earned by the insurer in respect of mortgage insurance policies during that accounting period. |
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(3) Any withdrawal under sub‑paragraph (2) is to be attributed to transfers made to the contingency reserves on a first‑in, first‑out basis such that all withdrawals under sub‑paragraph (2) are attributed to transfers in the order that they have been made to the contingency reserves, beginning with the earliest transfer. |
(4) Where the amount to be withdrawn under sub‑paragraph (2) exceeds the outstanding value of the transfer that it is to be attributed to under sub‑paragraph (3) (being the balance remaining after deducting withdrawals that had been attributed to that transfer previously), the excess amount is to be attributed to the transfer immediately following the aforementioned transfer, and so on until the withdrawal has been fully attributed to one or more transfers. |
(5) Where a mortgage insurer has made a transfer to the contingency reserves under sub‑paragraph (1) in respect of an accounting period (the particular accounting period), the mortgage insurer must, at the end of 10 contiguous accounting periods following the particular accounting period, withdraw from the contingency reserves an amount that is equal to the difference between —(a) | the transfer to the contingency reserves made in respect of the particular accounting period; and | (b) | the aggregate of the amounts withdrawn under sub‑paragraph (2) and attributable to the transfer in respect of the particular accounting period in accordance with sub‑paragraphs (3) and (4), |
and such withdrawal is to be regarded as attributed to that transfer for the purpose of sub‑paragraph (3). |
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(6) Where the amount of contingency reserves maintained by a mortgage insurer at the end of an accounting period is equal to or above the threshold amount for that accounting period after taking into account any withdrawal to be made under sub‑paragraphs (2) and (5) only, a mortgage insurer is not required to make the transfer under sub‑paragraph (1). |
(7) Where, in respect of any accounting period, after taking into account —(a) | any withdrawal to be made under sub‑paragraphs (2) and (5) in respect of that accounting period; and | (b) | any transfer to be made under sub‑paragraph (1) in respect of that accounting period, |
the amount of contingency reserves maintained by a mortgage insurer would exceed the threshold amount for that accounting period, the amount that the insurer must transfer for the purpose of sub‑paragraph (1) is reduced by an amount that is equal to the extent by which the contingency reserves would exceed the threshold amount. |
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Contingency reserves requirement for trade credit insurer |
3.—(1) Subject to sub‑paragraphs (3) and (4), at the end of each accounting period, a trade credit insurer must transfer to the contingency reserves —(a) | where the amount of contingency reserves maintained by a trade credit insurer is less than one‑third of the threshold amount at the end of an accounting period — the higher of the following amounts:(i) | 12% of the net premiums written in that period in respect of trade credit insurance policies; | (ii) | 50% of underwriting profit earned during that period in respect of trade credit insurance policies; or |
| (b) | where the amount of contingency reserves maintained by a trade credit insurer is equal to or more than one‑third of the threshold amount at the end of an accounting period — the lower of the following amounts:(i) | 12% of the net premiums written in that period in respect of trade credit insurance policies; | (ii) | 50% of underwriting profit earned during that period in respect of trade credit insurance policies. |
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(2) Any transfer to the contingency reserves may be withdrawn at the end of an accounting period and to the extent that the net claims incurred by the insurer in respect of trade credit insurance policies exceed the net premiums earned by the insurer in respect of trade credit insurance policies during that accounting period. |
(3) Where the amount of contingency reserves maintained by a trade credit insurer at the end of an accounting period is equal to or above the threshold amount for that accounting period after taking into account any withdrawal to be made under sub‑paragraph (2), a trade credit insurer is not required to make the transfer under sub‑paragraph (1). |
(4) Where, in respect of any accounting period, after taking into account —(a) | any withdrawal to be made under sub‑paragraph (2) in respect of that accounting period; and | (b) | any transfer to be made under sub‑paragraph (1) in respect of that accounting period, |
the amount of contingency reserves maintained by a trade credit insurer would exceed the threshold amount for the accounting period, the amount which the insurer must transfer for the purpose of sub‑paragraph (1) is reduced by an amount that is equal to the extent by which the contingency reserves would exceed the threshold amount.”. |
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[G.N. Nos. S 884/2005; S 733/2007; S 160/2008; S 112/2012; S 233/2013; S 845/2018] |