MAS responds to feedback on proposed changes to group capital framework for designated financial holding companies (licensed insurer)

29 September 2026

On 4 September 2026, the Monetary Authority of Singapore (“MAS”) published its response to feedback received on its consultation on proposed changes to MAS Notice FHC-N133 on Valuation and Capital Framework for Designated Financial Holding Companies (Licensed Insurer) (“FHC-N133”) (“Response”).

In the consultation paper, published on 24 July 2025, MAS sought feedback on proposals to:

  • incorporate the risk charging approach for non-insurance entities (“NIEs”) of a designated financial holding company (licensed insurer) (“DFHC (Licensed Insurer)”);
  • enhance the capital treatment for joint ventures of a DFHC (Licensed Insurer); and
  • introduce a limit to the recognition of capital from non-controlling interests (“NCIs”) in group financial resources.

In a circular published on 4 September 2026, MAS stated that it aims to issue the amendments to FHC-N133 by 31 December 2026, with the amendments taking effect on 1 January 2027. Key changes are discussed below.

Risk charging approach for NIEs

MAS proposed an explicit risk charging approach for NIEs of a DFHC (Licensed Insurer) to promote transparency and comparability of risk requirements set up for NIEs, and provide clarity of treatment in the case of NIEs that are not subject to any sector-specific capital requirements.

Following feedback, MAS will fine-tune the risk charging approach of certain NIEs under FHC-N133 in the following manner:

  • Define an NIE in FHC-N133 as an insurance group entity that is not a licensed insurer or a foreign insurance entity; and
  • Clarify that the NIE risk charge need not be applied to the NIEs if one or more of the following criteria are met:
    • NIEs that do not undertake significant businesses other than holding subsidiaries or holding the group’s assets within the financial holding company (“FHC”) group. These entities’ cash flows consist primarily of upstreamed dividends, investment income of assets held, and capital support for subsidiaries;
    • Special purpose vehicles held solely for investment purposes;
    • Investment funds that are held for investment purposes, including collective investment schemes.

Limits to recognition of capital from NCIs

MAS proposed imposing a limit on the recognition of NCIs in group financial resources to reflect the non-fungible nature of NCI at the group level. Any capital from NCI exceeding this limit will consequently not be recognised in group financial resources.

In the Response, MAS stated that it 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 Total Risk Requirement (“TRR”) from the Group Capital Adequacy Ratio as proposed by a respondent.

The limit on NCI from a legal entity will be the consolidated Group TRR supported by the entity’s NCI, as determined using the following formula:

NCI Proportion × Estimated Contribution of entity to Group TRR, where:

  • NCI Proportion = (Equity elements issued to third parties of the entity) / (FR of the entity)
  • Estimated Contribution of entity to Group TRR =
    • TRR of the solo entity / simple sum of the TRR of the group’s legal entities; multiplied by
    • the Group TRR

The total NCI deducted from group financial resources consists of the sum of NCIs (that are in excess of the NCI limit) from all entities within the FHC group. All TRRs are determined based on RBC 2.

The NCI limit should similarly apply to Common Equity Tier 1 capital and Tier 1 capital when deriving the respective quality of capital ratios, but with adjustments to the formula to reflect the relevant information from ex-participating businesses.

Reference materials

The following materials are available on the MAS website www.mas.gov.sg: