MAS responds to feedback from consultation on proposed equity counter-cyclical adjustment for insurers
29 September 2025
On 25 August 2025, the Monetary Authority of Singapore (“MAS”) published its response to feedback received from its public consultation on the proposed counter-cyclical adjustment (“CCA”) for insurers (“Response”).
Background
On 27 March 2025, MAS issued a consultation paper on the proposed equity CCA and inclusion of additional criteria for Additional Tier 1 (“AT1”) and Tier 2 capital instruments for insurers, which sets out the proposed design and operational aspects for equity CCA and newly added criteria for AT1 and Tier 2 capital instruments for insurers under the RBC 2 framework. The consultation closed on 28 April 2025.
Response
MAS will proceed with the introduction of the CCA. The proposed CCA incorporates an upward adjustment of +5% during periods of market exuberance. In the Response, MAS stated that the CCA will be a mandatory requirement to ensure uniform application across the industry. This mandatory approach will prevent selective implementation, whereby insurers might choose to opt out during market upswings or opt in during periods of market stress.
Acknowledging feedback that the use of daily year-on-year (“YoY”) returns makes the CCA sensitive to the timing and duration of stress, MAS will instead use monthly average YoY returns, which is calculated as follows:
- Determine the YoY returns on a daily basis; and
- Compute the average YoY returns over the past one-month.
MAS plans to implement the equity CCA with effect from 1 January 2026.
Further details on the methodology and design of the CCA are set out in the Response.
MAS’ responses to the feedback received on the proposed additional criteria for AT1 and Tier 2 capital instruments for insurers under the RBC 2 framework will be covered in a subsequent response paper.
Reference materials
The following materials are available on the MAS website www.mas.gov.sg: