Monetary Authority of Singapore (MAS)

There are no foreign ownership limitations or shareholding caps for insurance companies.

Yes (based on precedents).

From a regulatory perspective, MAS approval is required if the M&A transaction results in a person obtaining effective control or substantial shareholding of a licensed insurer incorporated in Singapore, if there is a change in the key executive person, chairman or director of a licensed insurer, or reduction in paid-up capital.

• Control of take-overs of licensed insurers incorporated in Singapore: No person shall obtain effective control of a licensed insurer incorporated in Singapore without the prior written approval of the MAS. "Effective control" is defined to include holding 20% or more of the total issued shares in the insurer, or being in a position to control 20% or more of the voting power in the insurer.
• Control of substantial shareholdings of licensed insurers licensed in Singapore: No person shall become a substantial shareholder of a licensed insurer incorporated in Singapore without the prior written approval of MAS. "Substantial shareholding" is defined as interest in one or more voting shares in the company, provided that the total votes attached to the share(s) is not less than 5% of the total votes attached to all the voting shares in the company (Section 81 Companies Act).
• Change in key executive person, chairman or director of licensed insurer: If the M&A transaction will result in a change or appointment of a new key executive person, chairman, or director of a licensed insurer, MAS approval is required.
• Reduction in paid-up capital: In the unlikely event that the M&A transaction results in a reduction in paid-up capital, a locally incorporated insurer will need to seek the approval of the MAS.   

The insurer should ensure that the M&A transaction will not breach any existing license conditions imposed by the MAS.

There may also be broader considerations such as competition law and regulatory approvals that may be relevant depending on the facts.

No, MAS approval is required if the M&A transaction results in a person obtaining effective control or substantial shareholding of a licensed insurer incorporated in Singapore, if there is a change in key executive person, chairman or director of a licensed insurer, or reduction in paid-up capital.

No, there is no express statutory requirement in relation to a single presence policy. However, the Insurance Act provides that MAS approval is required for a person to become a "substantial shareholder" or to obtain "effective control" of a licensed insurer incorporated in Singapore (see definitions in response to question 4). One of the conditions for approval is the "likely influence of the people in relation to whether the insurer will continue to conduct its business prudently." Therefore, MAS may take into consideration the person's existing substantial shareholding or effective control of a licensed insurer in determining whether to give approval for obtaining effective control or substantial shareholding in another licensed insurer.

Share deal

MAS approval is required for a share deal if it will result in the acquirer having a substantial shareholding (i.e., an interest in 5% or more of voting shares) or obtaining effective control (i.e., holding 20% or more of the total issued shares, or being in a position to control 20% or more of the voting power) of a licensed insurer incorporated in Singapore.

Asset deal

For an asset deal involving a transfer of the whole of part of an insurance business, MAS approval must be obtained and the transfer must be effected by way of a court-approved scheme.

Both requirements do not apply to the transfer of the whole or part of any insurance business of a company established or incorporated outside Singapore, except insofar as it relates to Singapore policies and offshore policies.

The requirement that the transfer must be effected by a court-approved scheme also does not apply to the transfer of any insurance business of a licensed insurer where it relates to the reinsurance business or a captive insurer.

Share deal

In a share deal resulting in the acquirer having a substantial shareholding or obtaining effective control of a licensed insurer incorporated in Singapore, obtaining regulatory approval will take approximately three to four months.

Asset deal

In an asset deal resulting in a transfer of the whole or part of an insurance business, obtaining both MAS and court approvals will take approximately nine to 12 months.

There is no statutory prohibition. Empirically, we note that most insurance companies in Singapore are wholly owned subsidiaries of foreign parent companies or are branches of foreign head offices. However, there are also insurers that are held by multiple private investors. It is likely that private equity investors will be subject to more extensive review in the regulatory approval processof becoming a substantial shareholder of an insurer.

FHCs are regulated under the Financial Holding Companies Act (FHCA), which has been gazetted but has not come into force yet.

The FHCA, when in force, will empower MAS to regulate FHCs of financial groups. If the FHC is the ultimate parent of a financial group with a bank and/or insurance subsidiary in Singapore, MAS will be the home supervisor of the FHC and its financial group. If the FHC is an intermediate holding company, MAS will evaluate the significance of its bank and/or insurance subsidiary in Singapore to the Singapore financial system, or to the intermediate FHC group.

Designated FHCs will have to comply with the FHC requirements, including but not limited to, obtaining MAS approval for shareholders with substantial or controlling interests in the FHCs, complying with corporate governance regulations on the roles and responsibilities of directors, and appointing key persons such as the chief executive officer of the FHC.

Financial advisors, bancassurance, agency force, brokerage arrangements, and direct and indirect distribution through digital platforms

Yes, bancassurance is a popular mode of distribution.

There are no specific approvals from the MAS, although the bank may need to notify the MAS depending on the scope of the bancassurance arrangements (i.e., banking representatives will need to be appropriately licensed/approved).

The salient terms are:

• Exclusivity (and any exclusions to exclusivity)
• Products
• Co-branding/white label products
• Remuneration and risk allocation
• Mining of the bank’s customer data
• Temination provisions

Share and asset deals

• Obtaining the requisite court and MAS approvals
• Legal issues relating to the sharing of customer information, especially for foreign insurers considering integration strategies that involve cross-border transfer of information

Asset deal

• Issuing notices of assignment to all policy holders
• Transfer of contracts, policies and other business undertakings