With a first set of deals now under its belt, Singapore is “fast maturing” as a viable domicile for insurance-linked securities (ILS) transactions, according to Gillian Tan, Executive Director at the Monetary Authority of Singapore (MAS).
Speaking at the ILS Asia 2019 conference in Singapore last week, which was hosted by our sister publication, Artemis, Tan explained that Singapore was benefitting from more established processes and institutional knowledge.
Of particular note is the fast-track application scheme introduced by the MAS, which aims to process straightforward classic structure deals within 8 weeks of application.
Looking to the future, the MAS will aim to refine its regulatory, corporate and tax infrastructure, Tan said, while promoting a more diverse ecosystem of ILS service providers and investors in Asia.
Tan’s comments came as part of a wider discussion on the development of the ILS market in Asia, which underpinned the program for the Artemis ILS Asia 2019 conference.
“The ILS market is reaching an inflection point, both globally and in Asia,” Tan told attendees, adding that the region was “well-poised” to develop its ILS market by harnessing Asian risks and ILS capital to provide diversification to the developed market.
To catalyse Asian markets, Tan believes that pricing challenges have to be addressed by closing gaps in modelling and valuation practices.
“This is one of the key reasons why ILS has not taken off in Asia in the past,” she said, pointing to efforts to bridge the data gap in Asia, such as the Natural Catastrophe Data Analytics Exchange, led by the Nanyang Technological University’s Institute of Catastrophe Risk Management, together with the industry consortium and PERILS AG.
Tan added that the market could also do more to educate sponsors on how ILS can contribute to a more effective risk management strategy, and create more innovative structuring solutions.
“Raising the awareness of ILS as an alternative asset class would be a crucial next step to drive interest in ILS products,” she noted.
Finally, Tan argued that the ILS market in Asia would benefit from having an efficient domicile and access to ILS service providers in the same time zone.
“The ecosystem here has to complement the global service providers who have been the leading forces for the market, while also adapting to the unique risks and culture in Asia, to better respond to Asia’s ILS needs,” she said.
Singapore celebrated its first ILS issuance in December 2018, with the Orchard ILS transaction by Insurance Australia Group (IAG).
Orchard ILS was the first SPRV licensed in Singapore and its catastrophe bond was the first to be issued out of Singapore and an Asian domicile. It was also IAG’s first cat bond.
This was followed by the issuance of First Coast Re II by Security First Insurance and the issuance of Manatee Re III by Safepoint Insurance.
The First Coast Re II transaction was the first full-fledged 144A-type catastrophe bond to be issued here by Security First, the first Floridian issuer to do so in Asia.
