MAS proposes capital relief, S$30m fund to spur insurer infrastructure investment

The Monetary Authority of Singapore (MAS) has unveiled measures to channel more insurer investment in infrastructure and securitisation assets, including proposed reductions in capital requirements for qualifying investments and a S$30m (US$23.45m) industry capability-building programme.

Speaking at the Singapore International Reinsurance Conference on 2 November, Chee Hong Tat, Singapore’s minister for national development and deputy chairman of MAS, said insurers play a larger role as providers of protection and as long-term investors supporting Asia’s growth and infrastructure financing needs. He described insurers as both “architects of resilience” and “partners in growth” for Asia’s economies.

Under the proposed enhancements to Singapore’s Risk-Based Capital 2 (RBC 2) framework, which took effect in March, MAS intends to broaden the scope of qualifying infrastructure debt eligible for preferential capital treatment.

The central bank plans to lower capital charges for qualifying infrastructure debt and equity and for senior investment-grade securitisation tranches, subject to conditions on credit quality, revenue stability and, in some cases, Singapore domicile.

Qualifying investment-grade infrastructure debt would benefit from capital charges 20%-25% lower than comparable corporate debt, while qualifying infrastructure equity risk charges would be reduced to 30% in developed markets and 35% in emerging markets, subject to revenue and counterparty conditions.

MAS also proposed lower capital loadings for qualifying securitisation investments. Risk charges on certain senior investment-grade non-debt securitisations could fall from 300% to as low as 25%, while senior debt-based securitisation tranches meeting specified criteria could see loadings reduced from 50% to 0%.

“Where infrastructure and other long-term assets demonstrate different risk characteristics, our insurance capital framework should recognise this, while maintaining sound prudential standards and protecting policyholders,” Chee said.

Supporting infrastructure investment capabilities

To support the industry’s participation in infrastructure financing, MAS will also allocate S$30m from the Financial Sector Development Fund to help insurers develop specialist investment capabilities. The funding will support the establishment of dedicated infrastructure investment teams, training for investment professionals and engagement with external advisers needed to originate, assess and manage infrastructure assets.

MAS will also recognise more external credit assessment institutions with expertise in infrastructure and securitisation issuances, a move that is expected to widen the pool of qualifying debt instruments.

“The intention is to anchor the people, expertise and decision-making capabilities needed to originate, assess and manage these investments from Singapore,” Chee said during his keynote.

MAS’s announcement comes as regulators across Asia seek to channel more insurer capital into long-term assets. Hong Kong, Taiwan and South Korea have all introduced or proposed solvency-framework changes in recent years aimed at supporting infrastructure investment.

US$200m in data centre insurance facility

Chee said insurers can support Asia’s infrastructure expansion not only through capital provision, but also through specialised risk-transfer solutions.

As part of that effort, MSIG, Gallagher Re, SCOR, Samsung Re and the Cybersecurity Association Singapore are expected to sign an agreement this week to establish a Singapore-based data centre insurance facility with US$200m of initial capacity.

The facility will provide cover across construction, operational, supply-chain, design and cyber risks associated with data centres, an asset class that is expanding rapidly across Asia as investment in AI and digital infrastructure accelerates.

Insurance solutions and capacity for data centre risks “remain relatively fragmented”, and individual insurers may be limited in the scale and breadth of risks they can take on, Chee said. “We welcome more insurers, reinsurers, and other partners to contribute capacity and expertise as this facility develops.”