SG insurers see growth in new business premiums and asset holdings

However, higher interest rates could constrain new business growth and increase policy redemptions.

Insurers in Singapore experienced growth in new business premiums and asset holdings over the past year, supported by resilient global economic growth, according to the Monetary Authority of Singapore's (MAS) Financial Stability Review. 

Elevated interest rates also benefited life insurers due to the longer duration of their insurance liabilities compared to their assets. 

However, MAS noted that higher interest rates could constrain new business growth and increase policy redemptions, as alternative investments offering higher returns create greater competition. Ongoing geopolitical uncertainties further pose risks to global financial markets, potentially affecting insurers' solvency and liquidity. 

To evaluate insurers' resilience to unexpected shocks, MAS conducted an industry-wide stress test using a three-year base and stress scenario. 

The stress scenario assumed sharp interest rate hikes, declining equity prices, and widening credit spreads. Under these conditions, insurers were primarily affected by a decline in asset values due to financial shocks. 

Nevertheless, MAS said higher interest rates helped reduce the value of long-term guaranteed liabilities for life insurers, offsetting some of the negative impacts. 

Insurers managed to meet regulatory capital requirements in certain instances after implementing management actions such as adjusting bonus allocations, reducing dividend transfers to shareholders, and modifying asset allocations, it added.