MAS Notice 124 Disclosures
As a general insurer licensed under the Insurance Act (Cap. 142) and regulated by the Monetary Authority of Singapore (MAS), we are required to disclose certain information about our company, pursuant to MAS Notice 124.
MSIG Singapore is wholly owned by MSIG Holdings (Asia) Pte. Ltd. and holds an A+/Stable financial rating by Standard & Poor’s.
In Year 2017, MSIG Insurance (Singapore) Pte. Ltd. ("MSIG Singapore") achieved a gross written premium of S$338 million and is ranked 4th largest insurer in the general insurance industry.
MSIG Singapore offers an extensive range of insurance solutions for commercial and personal risk protection, enabling the security and safety of individuals and businesses.
Key Insurance Products include:
Personal Insurance — Travel, Motor, Home and Contents, Maid, Accident, Health and Golf
Commercial Insurance — Property, Marine, Construction and Engineering, Motor, Financial Lines, Liability, Employees and Business Packages
We offer the products through our direct sales channel and extensive service network of agents, brokers, strategic partnerships and bancassurance alliances.
The Company has established a framework of responsibilities which is consistent with the following generally recognised basic principles of sound risk management practice:
- Appropriate overview by Board of Directors and senior management; the Company has a Risk Management Committee which includes the Senior Management Team to oversee the overall risk management framework.
- Adequate risk management process that provides for continuous risk monitoring by management; and
- Comprehensive internal controls and assurance processes linked to key business risks.
The Company has an Enterprise Risk Management (“ERM”) framework that enables the Company to meet the regulatory requirements and to support risk‑based decision making. The framework is aligned to MAS Notice 126.
The key components of the ERM framework are namely the Risk appetite statement, the Business strategy, Capital management, Risk management policy and the Own Risk and Solvency Assessment (“ORSA”).
The Company has established a Risk appetite statement, reviewed annually, that outlines the overall risks that the Company undertakes in pursuit of the Company’s business strategy plan.
The Company has in place a Risk management policy that covers the processes to assess, monitor and report risks in the Company. In line with MAS Notice 126 on ERM, the Company conducts an ORSA assessment on an annual basis.
With effect from 1 August 2013, the Company has set up an independent ERM function reporting directly to the CEO to develop the ERM framework and to promote risk awareness within the Company.
The framework comprises 3 Lines of Defence (LoD):
- First LoD: The management owns and manages risks. The management is also responsible for implementing corrective actions to address process and control deficiencies.
- Second LoD: The ERM Department provides an oversight of the risk management practices. It also reviews and challenges the risks taken by the first LoD.
- Third LoD: The Internal Audit Department provides an independent assurance on the existence and effectiveness of risk management and internal controls.
The Company also has in place a whistle‑blowing policy whereby accessible channels are provided for employees to raise concerns about possible improprieties in matters of financial reporting or other material issues.
The operations of the Company are also subject to local regulatory requirements. Such regulations not only prescribe approval and monitoring of activities but also impose certain restrictive provisions e.g. capital adequacy to minimise the risk of default and insolvency of insurance companies.
i. Credit risk
ii. Liquidity risk
iii. Market risk
- Foreign currency risk
- Interest rate risk
- Equity price risk
- Further details of the above risks can be found in the Notes to the Financial Statement.
iv. Capital management
The Company’s capital management policy aims to:
- maintain a strong capital base to sustain and grow the business so as to uphold investors, creditors and market confidence;
- to comply with the regulatory capital requirements for the Company; and
- to provide an adequate return to shareholders through prudent underwriting of insurance risks and optimising investment returns within the risk parameters established by the Board.
Under the financial reporting standards, capital comprises paid‑up share capital and retained earnings.
In Singapore, the minimum capital requirement under the Risk‑Based Capital Framework regulated by the Monetary Authority of Singapore is 120%.
The Company determines the amount of capital in accordance with business expansion needs as well as to meet the regulatory capital requirements for the Company.
Having considered the key risks the Company faces, the Company also conducts stress testing analysis annually which includes quantification of the Company’s solvency position from material insurance losses. Based on the latest stress testing review, the Company is assessed to be able to withstand shocks from reasonable but material insurance risks.
v. Insurance risk and risk transfer
The objective of the Company is to control and minimise insurance risk to reduce the volatility of operating profits. The Company manages insurance risk through the following mechanism:
- Actuarial models based on past experience and statistical techniques aid to monitor claim patterns and ensure appropriate pricing.
- Insurance reserves are reviewed regularly by actuaries to ensure that the amount of reserves held is sufficient at all times. The risk of under‑reserving is unlikely to be material as insurance claims in Singapore generally take a relatively short time to be reported and settled. Also, the Company carries an additional amount of reserve to cover the possibility of adverse development in claims experience at a level such that there is at least a 75 per cent chance that the reserves will be sufficient.
- Guidelines are issued for concluding insurance contracts and assuming insurance risks.
- Proactive claims handling procedures are followed to investigate and adjust claims, thereby preventing settlement of dubious or fraudulent claims.
- Reinsurance is used to limit the Company’s exposure to large claims and catastrophes by placing risk with reinsurers which have high security ratings.
- Diversification is accomplished by achieving a sufficiently large population of risks to reduce the variability of the expected outcome. The diversification strategy seeks to ensure that underwritten risks are well diversified in terms of type and amount of risk and industry.
- MSIG Singapore underwrites mainly Singapore‑based risks. A part of the portfolio, primarily cargo insurance, relates to insured risks which are offshore.
- We maximise retention of risk to grow net premium and improve the underwriting result. We operate a policy to manage our reinsurance counterparty exposures including use of reinsurers with defined minimum credit rating. The natural catastrophe exposure is analysed using external probability catastrophe models. Reinsurance is then purchased at the appropriate level.
The risk under insurance contracts is the possibility of occurrence of an insured event and uncertainty of the amount and timing of resulting claim. The principal risk the Company faces under such contracts is that the actual claims exceed the carrying amount of insurance liabilities. This could occur due to any of the following:
- Occurrence risk — the possibility that the number of insured events will differ from those expected.
- Severity risk — the possibility that the cost of the events will differ from those expected.
- Development risk — the possibility that changes may occur in the amount of an insurer's obligation at the end of the contract period.
- Insurance risk includes underwriting risk and reserving risk.
- Underwriting risk refers to the risk associated with volatilities in the timing, frequency and severity of insured events, relative to the expectations of the insurer at the time of underwriting.
- Reserving risk refers to the risk that current reserves are not sufficient to cover all future costs including claim settlements and associated claims handling expenses in respect of claims that have already occurred.
Our investments form a large portion of our total assets in the balance sheet. We hold investments mainly in cash equivalents (term deposits), equities, securities, debt securities and Collective Investment Schemes.
Further information on our investments and investment income can be found in the Notes to the Financial Statement.