MAS issues “Technical Specifications for RBC 2 YE2018 Parallel Run” for insurers

29 May 2019

On 6 May 2019, the Monetary Authority of Singapore (“MAS”) issued “Technical Specifications for RBC 2 YE2018 Parallel Run” and accompanying Circular No. ID 07/19 to insurers which are licensed and governed under the Insurance Act, with the exception of captives, Lloyd’s insurers and marine mutuals.

MAS has made further refinements to the RBC 2 technical specifications following the analysis of the Risk-Based Capital 2 (“RBC 2”) impact study submissions, company visits and feedback received in 2018. This set of technical specifications sets out the updated policy positions on the RBC 2 framework on matching adjustment, illiquidity premium and recognition of internal credit rating model or process for unrated corporate bonds. There remains a few areas, such as the treatment of infrastructure investments and securitised assets and calibration of the general insurance catastrophe risk requirement, which MAS intends to consult with the industry in due course this year.

All insurers (with the exception of captives, Lloyd’s insurers and marine mutuals) are required to conduct a parallel run based on the finalised proposals in this technical specifications document for the year ended 31 December 2018. This will allow the insurers and MAS to assess the impact of finalised RBC 2 proposals on their capital positions and the wider business and strategic implications when RBC 2 takes effect on 1 January 2020.

MAS expects to conduct a final parallel run for the year ended 31 December 2019.

Reference materials

The following materials are available on the MAS website www.mas.gov.sg or by clicking the links below:

 

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