Singapore extends ILS Grant Scheme three years to end 2025: MAS

The insurance-linked securities (ILS) grant scheme in Singapore has been a significant help in the country attracting catastrophe bonds and other ILS activity and it has now been extended by a further three years, to run until the end of 2025.

Singapore began its focus on insurance-linked securities (ILS) as a business opportunity around 2016, becoming a regular keynote speaker at our series of ILS Asia conferences (the next conference upcoming in July 2023) and engaging withe ILS market participants globally.

By late 2017, plans for an ILS Grant Scheme to help fund some of the upfront costs incurred in issuing catastrophe bonds in the country were formulated and an ILS working group established to set a strategic direction.

Fast-forward to 2023 and we now have 21 separate Singapore located catastrophe bond issues listed in the Artemis Deal Directory, while we’ve also seen three issuances of a collateralised reinsurance sidecar that benefits MS Amlin in Asia.

The ILS Grant Scheme has certainly assisted in bringing this ILS activity to Singapore, but so too have the regulators flexible approach and willingness to engage directly with ILS market participants around the globe.

Now, the ILS Grant Scheme has been extended for a further three years, so the Singapore ILS Grant will now be available to qualifying cat bond and other ILS sponsors right through until the end of 2025.

Speaking this morning, Mr Lawrence Wong, Deputy Prime Minister and Minister for Finance of Singapore, as well as Deputy Chairman of the financial regulator the Monetary Authority of Singapore (MAS), announced this extension.

He also placed the ILS Grant Scheme as a priority within the Monetary Authority’s Finance for Net Zero (FiNZ) Action Plan, a strategy to to mobilise financing to catalyse Asia’s net zero transition and decarbonisation activities in Singapore and the region.

He explained that, “MAS will extend the Insurance-Linked Securities (ILS) Grant Scheme till end 2025 to support the continued growth of catastrophe bonds and additional climate risk financing instruments such as sidecars and collateralised reinsurance arrangements.”

Adding that, “This will enable additional financing for protection against disaster risks to be raised from the capital markets.”

He further explained that, “The S$15 million grant will defray the cost of issuing catastrophe bonds and the expanded suite of insurance-linked securities that focus on Asia risks.”

It’s assumed the S$15 million is the available pot for the grant, across issuances over the next three years.

One point worth noting, is the mention of ILS that focus on Asia risks. This could imply that the ILS Grant’s focus is tightening more towards cat bonds and ILS that transfer regional risks, over international risks.

Which would make sense, as Singapore’s original mandate with its ILS strategy was to foster the development of an issuance platform and marketplace for the Asia region.

The latest catastrophe bond sponsor to look to Singapore is the New Zealand Earthquake Commission, who’s debut cat bond will be located there.

Since the development of the ILS Grant Scheme, including the as yet to price NZ EQC cat bond, Singapore has now played host to over $4 billion of ILS issuance, a clear demonstration of the effective strategy it has followed.

That is made up of almost $3.9 billion of catastrophe bond issuance and a further roughly $125 million in risk capital issued through MS Amlin’s Phoenix Re sidecar series of deals.

We’re returning to Singapore for our ILS Asia 2023 conference on July 13th this year and you will be able to hear from the Monetary Authority of Singapore (MAS) at the event. Please join us, registration is open.