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Formal Consolidation |  Amended S 233/2013
Fund solvency requirement and capital adequacy requirement
4.—(1)  For the purposes of section 18(1)(a) of the Act, the fund solvency requirement in respect of an insurance fund established and maintained by a licensed insurer under the Act shall at all times be such that the financial resources of the fund are not less than the total risk requirement of the fund.
[S 233/2013 wef 18/04/2013]
(2)  For the purposes of section 18(1)(b) of the Act, the capital adequacy requirement of a licensed insurer shall at all times be such that the financial resources of the insurer are not less than —
(a)the sum of —
(i)the aggregate of the total risk requirement of all insurance funds established and maintained by the insurer under the Act; and
(ii)where the insurer is incorporated in Singapore, the total risk requirement arising from the assets and liabilities of the insurer that do not belong to any insurance fund established and maintained under the Act; or
(b)a minimum amount of $5 million, whichever is the higher.
[S 233/2013 wef 18/04/2013]
(3)  A licensed insurer shall immediately notify the Authority when the insurer becomes aware that —
(a)it has failed, or is likely to fail, to comply with paragraph (1) or (2); or
(b)a financial resources warning event has occurred or is likely to occur.
[S 233/2013 wef 18/04/2013]
(4)  Where the Authority is notified by an insurer under paragraph (3)(a) or becomes aware of any inability by the insurer to comply with paragraph (1) or (2), the Authority may —
(a)require the insurer to comply with such directions as the Authority may impose, and in particular, require the insurer —
(i)to submit to the Authority financial statements on a monthly basis or at such other intervals as the Authority may require, until the insurer satisfies the fund solvency requirement or the capital adequacy requirement, as the case may be, for 90 consecutive days or such other period as may be determined by the Authority;
(ii)to submit to the Authority a plan on how the insurer intends to satisfy the fund solvency requirement or the capital adequacy requirement, as the case may be; or
(iii)to stop renewing or issuing further policies in respect of one or more classes of business; and
(b)direct the insurer to carry on its business in such manner and on such conditions as the Authority may impose.
(5)  If the Authority is notified by an insurer under paragraph (3)(b) or becomes aware that a financial resources warning event has occurred, the Authority may direct the insurer —
(a)to submit to the Authority a plan on how the insurer intends to stop the financial resources warning event from continuing; and
(b)to carry on its business in such manner and on such conditions as the Authority may impose.
(6)  In this regulation, “financial resources warning event” means an event which results in the financial resources of the insurer being less than —
(a)120% of the amount calculated in accordance with paragraph (2)(a); or
(b)the minimum amount in paragraph (2)(b),
whichever is the higher.
[S 233/2013 wef 18/04/2013]
Informal Consolidation | Amended S 137/2020
Fund solvency requirement and capital adequacy requirement
4.—(1)  For the purposes of section 18(1)(a) of the Act, the fund solvency requirement in respect of an insurance fund established and maintained by a licensed insurer under the Act is that the total assets of the fund must not at any time be less than the total liabilities of the fund.
(2)  The fund solvency requirement of an adjusted fund is that the financial resources of the adjusted fund must not at any time be less than —
(a)the amount of the total risk requirement of the adjusted fund at the higher solvency intervention level; and
(b)the amount of the total risk requirement of the adjusted fund at the lower solvency intervention level.
(3)  For the purposes of section 18(1)(b) of the Act, the capital adequacy requirement of a licensed insurer is that the financial resources of the insurer must not at any time be less than —
(a)the higher of the following:
(i)the amount of the total risk requirement of the licensed insurer at the higher solvency intervention level;
(ii)$5 million; and
(b)the higher of the following:
(i)the amount of the total risk requirement of the licensed insurer at the lower solvency intervention level;
(ii)$5 million.
(4)  A licensed insurer must immediately give written notice to the Authority when the insurer becomes aware that the fund solvency requirement mentioned in paragraph (1) or (2), or the capital adequacy requirement mentioned in paragraph (3), is not satisfied or is not likely to be satisfied in accordance with section 18(1) of the Act.
(5)  A licensed insurer is not excused from giving written notice to the Authority under paragraph (4) on the ground that the disclosure of any information in the written notice may tend to incriminate the insurer.
(6)  Where a licensed insurer claims, before giving written notice to the Authority under paragraph (4), that any information in the notice may tend to incriminate the insurer, that information is not admissible in evidence against the insurer in criminal proceedings, except for proceedings for an offence under section 18(6) of the Act.
(7)  Where the Authority is notified by a licensed insurer or becomes aware that the financial resources of the adjusted fund, or the financial resources of the insurer, are less than or likely to be less than the amount of the total risk requirement of the adjusted fund or licensed insurer (as the case may be) at the higher solvency intervention level, the Authority may issue a direction to the insurer for all or any of the following purposes:
(a)requiring the insurer —
(i)to satisfy the fund solvency requirement of the adjusted fund, or the capital adequacy requirement of the licensed insurer (as the case may be) by the end of the period determined by the Authority;
(ii)to submit to the Authority a plan on how the insurer intends to satisfy that requirement; and
(iii)to submit to the Authority the financial statements of the insurer on a monthly basis or at other interval required by the Authority, until the insurer has continuously satisfied that requirement for a period determined by the Authority;
(b)directing the insurer to carry on its business in any manner and in accordance with any condition imposed by the Authority.
(8)  Where the Authority is notified by a licensed insurer or becomes aware that the financial resources of an adjusted fund of the insurer, or the financial resources of the insurer, are less than or likely to be less than the amount of the total risk requirement of the adjusted fund or licensed insurer (as the case may be) at the lower solvency intervention level, the Authority may issue a direction to the insurer for all or any of the following purposes:
(a)requiring the insurer —
(i)to stop renewing any existing policy or issuing any new policy in respect of one or more classes of insurance business;
(ii)to satisfy the fund solvency requirement of the adjusted fund, or the capital adequacy requirement of the licensed insurer (as the case may be) by the end of the period determined by the Authority;
(iii)to submit to the Authority a plan on how the insurer intends to satisfy that requirement; and
(iv)to submit to the Authority the financial statements of the insurer on a monthly basis or at other interval required by the Authority, until the insurer has continuously satisfied that requirement for a period determined by the Authority;
(b)directing the insurer to carry on its business in any manner and in accordance with any condition imposed by the Authority.
(9)  To avoid doubt, paragraph (8) does not affect any power of the Authority to cancel the licence of any insurer.
(10)  Where the Authority has issued a direction to a licensed insurer under paragraph (7) or (8) —
(a)the fund solvency requirement under paragraph (2) does not apply in relation to the adjusted fund in respect of which the direction was issued to the insurer; or
(b)the capital adequacy requirement mentioned in paragraph (3) does not apply in relation to the insurer,
as the case may be, during the period of validity of the direction.
(11)  In this regulation, an adjusted fund is —
(a)a participating fund established and maintained by a licensed insurer under the Act that relates to Singapore policies;
(b)a participating fund established and maintained by a licensed insurer under the Act that relates to offshore policies;
(c)the aggregate of the following insurance funds (if any) established and maintained by a licensed insurer under the Act that relate to Singapore policies:
(i)a non-participating fund;
(ii)an investment-linked fund;
(iii)a general fund; or
(d)the aggregate of the following insurance funds (if any) established and maintained by a licensed insurer under the Act that relate to offshore policies:
(i)a non-participating fund;
(ii)an investment-linked fund;
(iii)a general fund.
(12)  In this regulation —
“financial resources” means any asset or other resources specified in MAS Notice 133 to be eligible for the purpose of meeting the total risk requirement of an adjusted fund or a licensed insurer, as the case may be;
“higher solvency intervention level”, in relation to the amount of the total risk requirement of an adjusted fund or a licensed insurer, is the amount specified in MAS Notice 133 as the higher solvency intervention level;
“lower solvency intervention level”, in relation to the amount of the total risk requirement of an adjusted fund or a licensed insurer, is the amount specified in MAS Notice 133 as the lower solvency intervention level.
(13)  This regulation does not apply to a captive insurer, an SPRV and a marine mutual insurer.
[S 137/2020 wef 31/03/2020]