On Dec. 3, SIN MAS issued amended notice re investment activities.
SIN MAS issued an update to notice FHC-N125investment activities concerning financial holding companies with licensed insurer subsidiaries, informed all designated financial holding companies (DFHC) (licensed insurer) as well as licensed insurers.
Follows SIN MAS Jun. 2022 issued notices on financial holding companies, #141957.
Notice Requirements
DFHC (licensed insurer) to establish investment committee comprising senior management to oversee financial holding company group investment activities.
The DFHC (licensed insurer)'s board must approve and annually review group investment policy addressing risk tolerance, returns, and solvency; investment committee must report quarterly to board and within 2 weeks for material matters.
Requires limits on allocation by type, rating, geography, sector, counterparty, currency.
Investment policies to address selection of securities, risk monitoring, record keeping.
Each group entity must maintain consistent investment policies unless exempted.
Derivatives and Risk Management
Derivatives permitted only for hedging or efficient portfolio management; prohibits uncovered positions; must maintain sufficient liquid assets for cash-settled derivatives.
Requires adequate risk management including segregation of duties and qualified staff.
Description of Amendments
These amendments apply the MAS notice 125 revisions at the DFHC (licensed insurer) and FHC group level; the changes encompass areas like establishing asset allocation.
Specifically, establishing asset allocation limits by asset type as well as credit rating, along with developing a counterparty risk appetite statement where necessary.
