Focus on cross-border asset-intensive reinsurance amid global industry concerns
On August 29, 2024, the Monetary Authority of Singapore (MAS) announced that it would be closely monitoring reinsurance contracts entered into by insurers in Singapore. Insurers have been asked to submit details of these contracts for review, and the MAS made it clear that some of these agreements could undergo audits.
This increased scrutiny follows a report by the International Association of Insurance Supervisors (IAIS) in July, which raised concerns about cross-border asset-intensive reinsurance. The IAIS highlighted risks, such as potential conflicts of interest within corporate structures and increased exposure to liquidity and credit risks due to growing investments in alternative assets.
Key Points:
Reinsurance Monitoring: The MAS seeks the terms of contracts between insurers and reinsurers to ensure the stability of the industry.
IAIS Report: The report warned about risks stemming from cross-border reinsurance deals and growing allocations to alternative assets, such as private credit and equity.
Global Regulatory Response: The Bermuda financial regulator, a key hub for global reinsurance, is investigating the exposure of insurers to risky investment strategies.
The MAS’s increased attention on these contracts is part of a broader global effort to ensure the financial stability of the insurance sector amid evolving market dynamics.
