Designated Financial Holding Companies (Licensed Insurer) will be subject to changes to the group capital framework from 1 January 2027, covering risk charges for non-insurance entities (“NIEs“) and limits on the recognition of capital from non-controlling interests, including for quality of capital ratios. The Monetary Authority of Singapore (“MAS“) aims to issue the amendments to MAS Notice FHC-N133 (“Group Capital Notice“) by 31 December 2026. MAS set out the changes in its Response to the Feedback Received on the Consultation Paper, issued on 4 September 2026 (“Response“).
- Risk Charging Approach for NIEs
MAS will define an NIE as an insurance group entity that is not a licensed insurer or a foreign insurance entity.
The NIE risk charge need not be applied to NIEs meeting any of the following criteria:
- NIEs that do not undertake significant businesses other than holding subsidiaries or holding the group’s assets (i.e. cash flows consist primarily of upstream dividends, investment income of assets held and capital support for subsidiaries);
- special purpose vehicles (SPVs) held solely for investment purposes; and
- investment funds held for investment purposes, including collective investment schemes.
The underlying risks of these excluded NIEs will continue to be captured through relevant regulatory risk-based capital (“RBC 2“) risk charges (e.g. market-related risk charges on assets held).
For other NIEs which do not meet the above criteria, the NIE risk charging approach will apply in calculating the Total Risk Requirement (“TRR“). Other RBC 2 risk charges will not apply to such NIEs unless MAS determines that additional risk charges are necessary to more appropriately capture material risks posed by the NIE.
NIE risk charges will not yield any diversification benefits with other RBC 2 risk charges, as they are similar in nature to the operational risk charge under RBC 2. Diversification benefits may apply only where other RBC 2 risk charges (e.g. market-related risk charges) are imposed on the NIE.
- Limit on Recognition of Capital from Non-Controlling Interests (“NCI”)
MAS will retain the approach of limiting the amount of NCI recognised in Group Financial Resources (“FR“), rather than deducting the NCI’s entire share of FR and TRR from Group Capital Adequacy Ratio (CAR).
Please refer to the Response for the revised formula that will apply for the NCI limit from a legal entity.
- NCI Limit for Quality of Capital Ratios
The NCI limit will similarly apply to CET1 capital and Tier 1 capital when deriving the respective quality of capital ratios. The revised formula will apply, but with adjustments to reflect the relevant information from ex-participating businesses.
For a background of the changes proposed in the Consultation Paper, please refer to our July 2025 Newsbytes article titled “MAS Consults on Proposed Group Capital Framework and Catastrophe Risk Requirement for Designated Financial Holding Companies (Licensed Insurer)“. For more details and illustrations, please refer to MAS Response to Feedback Received on Changes to the Group Capital Framework for Designated Financial Holding Companies (Licensed Insurer).
If you have any queries on the above, please reach out to our Team set out on this page.
For regional Insurance and Reinsurance matters, please see Rajah & Tann Asia’s Insurance and Reinsurance Practice for more information.
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