Sponsors, investors & ILS fund managers engage with Singapore: MAS at ILS Asia 2024

Singapore sees continued interest from sponsors, investors and specialist insurance-linked securities (ILS) managers, with a few of the latter considering establishing offices there, Cheng Khai Lim, Executive Director, Financial Markets Development Department, Monetary Authority of Singapore (MAS) said in a welcome speech at our ILS Asia 2024 conference yesterday.

The conference was Artemis’ sixth ILS event held in-person in Singapore, with attendees registered from more than 90 organisations hearing educational and insightful discussions from industry leaders and experts. while benefitting from valuable networking opportunities, all with a focus on ILS in Asia.

The day began with a welcome keynote address from the Monetary Authority of Singapore’s (MAS) Cheng Khai Lim, who explained that traction continues to be gained, interest is expanding across the wider region, but that the need for risk transfer and reinsurance capital remains evident.

He said that 2024 has seen ILS activity continue in Singapore, saying that, “Singapore saw four catastrophe bond renewals this year – a vote of confidence from the cedants on Singapore’s value as an ILS domicile.”

Going on to note that interest is now coming from new areas of Asia by saying, “We also continue to receive interest from potential issuers covering risks from India and Africa.”

Lim spoke to the growing investor interest in ILS across the local and regional investment community, which as we explained had been noted in the attendance at our ILS Asia 2024 conference.

His speech continued, “The attractive returns from ILS assets are capturing mindshare, with greater interest and growing demand from clients in Asia, albeit from a small base.

“There is good potential for the growing institutional and private wealth investor base in Asia, including Singapore, to invest in ILS.

“The accumulation of family wealth and institutional capital in Asia-Pacific presents opportunity to tap into a bigger investor pool.

“From 2011 to 2022, total assets under management or AUM in Asia-Pacific grew at an annual rate of 14%, outpacing the global average of 9%.

“Wealth in the Asia-Pacific affluent segment is estimated to expand at an annual rate of 11% from 2021 to 2026. There will also be continued growth in pension assets. This is estimated to reach US$32.4 trillion, driven by reforms to existing pension systems and shifts towards alternative investments.

“In the past year, we have partnered SGX, Aon, and Amundi to host investor education sessions. MAS has also engaged private banks, and the Wealth Management Institute in Singapore to build mindshare on ILS as an asset class.

“While some are not immediately ready to allocate capital to ILS, it is an important first step for the private wealth segment and institutional asset owners to be apprised of opportunities in this asset class.

“Market participants have also shared with us that they are beginning to see some private wealth clients in Singapore allocating to ILS, through their banks’ discretionary allocations.”

All of which is extremely positive for the development of the local ILS market and a local and regional ILS investor base to support Asian activity and global ILS market capital needs.

Lim also noted the important role of service providers and other ILS market constituents and Singapore continues to attract expertise in the sector.

He said that, “We welcome more stakeholders in the ILS ecosystem to partner with MAS and other opinion multipliers to engage the investor base in Singapore.”

Encouragingly also stating that, “MAS has been engaging some ILS fund managers that are considering setting up offices in Singapore.”

That would be a very interesting step and signal a real opportunity for ILS managers to build relationships with the local Singapore and regional Asian investor community.

Lim also explained that Singapore continues to be a conducive location for regionally-focused ILS issuance.

“Issuers can tap on MAS’ ILS Grant scheme, which defrays the costs of ILS issuances in Singapore. The ILS grant scheme has supported 28 catastrophe bond issuances over the past 5 years, raising a total of US$4.4 billion. It was enhanced in 2023 to allow cedants to issue a broader spectrum of ILS instruments, including sidecars and collateralised reinsurance arrangements,” Lim said.

Adding that, “We are also looking into the required regulatory, tax and legal infrastructure required to support these instruments, and will progressively implement them.”

Referring to a number of recent initiatives to innovate in digital assets, smart contracts and technology to modernise insurance-linked securities (ILS), Lim also said Singapore is open to collaboration and facilitation.

“We encourage the ILS industry to also use Singapore as a test-bed for innovative products, tapping on our deep sustainable finance and digital assets eco-systems here,” he said.

The regulator itself remains committed to ILS market development and it is clearly on the priority list still, which is encouraging to see.

“To round up, MAS will continue to work closely with the ILS industry to offer Singapore as a conducive base for Asia’s ILS market, and match Asia’s risk financing needs with growing investor interest,” Lim closed his speech.

Artemis’ next conference will be our Artemis London 2024 event on September 3rd. We hope you can join us!

Our ILS Asia 2024 conference sponsors can be seen below, we thank them all for their valued support: