A file photo of the Merlion statue in Singapore. — Bloomberg
SINGAPORE: The nine key life insurers in Singapore have healthy capital buffers to withstand sudden shocks and observers expect them to remain well capitalised in the months ahead.
Based on publicly available data, almost all nine hit a capital adequacy ratio (CAR) of at least 150%, higher than the typical level of 100%.
The nine insurers are AIA Singapore, Etiqa Insurance, Great Eastern Life, HSBC Life Singapore, Manulife Singapore, Income Insurance, Prudential Singapore, Singlife and Tokio Marine Life Insurance Singapore.
The stipulated minimum CAR requirement of 100% is a way to ensure an insurer has enough capital buffer to withstand shocks.
Danny Fischer, who is head of solutions for Asia-Pacific at Mitsubishi UFJ Financial Group, said the CAR of Singapore life insurers remains strong and that it continues to be the case on a forward-looking basis.
“The sector is well capitalised and boards and management will continue to focus on strong capital solvency levels,” he said.
A look at the insurers’ returns showed that Tokio Marine Life’s CAR fell from 244% in 2019 to 102% in 2023.
The insurer said it adopted a renewed methodology in measuring capital adequacy, which was a key factor that led to the company revising its reported solvency ratios downwards, particularly in 2023.
Tokio Marine Life said it has taken various management actions, including capital injection in September 2024.
“As a result, Tokio Marine Life’s CAR rose to 245% as at the third quarter of 2024 (unaudited),” it said in a reply to The Straits Times’ queries. “We would like to reiterate (that) meeting our obligations to our customers and partners remains our utmost priority.”
Meanwhile, while Manulife’s CARs are well above the mandated level, it recorded the lowest CARs of between 152% and 199% in three of the five years from 2019 to 2023.
The insurer said it is in a position to meet its financial obligations and that it has a capital management policy to ensure it maintains a strong level of capital at country level to operate effectively and efficiently.
“At a global level, we are part of a global financial group with significant surplus capital,” Manulife added.
In the past, insurers would keep CAR above 120%.
With MAS’ risk-based capital framework for insurers updated in 2020, some market observers said the practice is no longer relevant.
The updated framework sets out tougher capital requirements so that insurers remain solvent in the event of shocks, and policyholders are protected.
When asked, Fischer said every company’s board sets a target CAR, usually in a band, above the minimum statutory CAR of 100%. — The Straits Times/ANN
