MAS Notice 133 Revisions 2026: Cyclical Equity Charge and Capital Instrument Changes for Insurers

The MAS Notice 133 revisions in 2026 change how Singapore insurers calculate the equity risk charge and which capital instruments count towards Available Capital, so the first task for finance and actuarial teams is to rerun the solvency projections on the amended text rather than on last year's assumptions. MAS announced the revised Notice 133 through circular ID 05/26 in March 2026, building on the capital instrument amendments communicated earlier in circular ID 15/25. This article sets out what changed, where the effect on the Capital Adequacy Ratio is likely to show up, and how to structure the review. It does not replace the Notice itself; every threshold and effective date below should be confirmed against the instruments in force.

What the revisions cover

Notice 133 is the Notice on Valuation and Capital Framework for Insurers under the RBC2 framework. Three strands of change matter for most licensed insurers.

The first is an equity counter-cyclical adjustment. MAS has described its purpose as reducing procyclical behaviour: when equity markets fall sharply, a risk charge that rises mechanically with volatility can push insurers towards selling equities at the worst moment, which deepens the downturn. The adjustment moderates the equity charge through the cycle.

The second is the capital treatment of structured products and infrastructure investments, which MAS consulted on in 2025 and responded to in circular ID 12/25. Our separate analysis of the infrastructure and securitised asset measures covers that strand in more detail, including the current consultation.

The third is the set of amendments to the criteria for Additional Tier 1 and Tier 2 capital instruments, communicated in circular ID 15/25 with amended notices taking effect from 1 January 2026. For insurers that issue or hold such instruments, this is a documentation and eligibility exercise as much as a quantitative one.

Insurers designated under a financial holding company structure should also check the parallel notice, FHC-N133, which applies the valuation and capital framework to designated financial holding companies that are licensed insurers.

How the equity counter-cyclical adjustment works in practice

Under RBC2, the equity risk charge is applied to the market value of equity exposures, with the charge varying by equity category. A counter-cyclical adjustment, in general terms, shifts the base charge up or down depending on where equity markets sit relative to a reference level. MAS consulted on calculating the adjustment from monthly average year-on-year equity returns, with a uniform approach across insurers rather than an insurer-specific one.

For the actuarial function the practical consequences are as follows.

• The equity charge is no longer a static percentage. Projection models need a rule for the adjustment, including how it is updated and when MAS publishes or requires the input.
• The Total Risk Requirement becomes partly a function of the equity market path. A stress scenario that drops equity values now also moves the charge applied to the remaining equity holdings, and the two effects can partly offset.
• Participating and investment-linked funds need separate attention. The ratio is assessed fund by fund, so the adjustment should be applied to each insurance fund and not only at entity level.

A common modelling error is to apply the new adjustment to the opening position and then hold it constant across a multi-year projection. If the adjustment is designed to move with markets, a projection that ignores this will overstate the capital drag in rising markets and understate the relief in falling ones.

Capital instrument recognition under the amended criteria

Recognition of capital instruments is where legal review and actuarial review meet. The amendments communicated in circular ID 15/25 revised the criteria that Additional Tier 1 and Tier 2 instruments must meet to qualify as Available Capital. Based on public commentary on the circular, a feature of the new approach is a restriction on the investor base for qualifying instruments, with the criteria applying to instruments sold only to non-retail investors. Confirm the exact wording, any grandfathering and any transition period in the Notice before relying on this summary.

For insurers with existing instruments in issue, we suggest a three-part review.

First, map each instrument against each amended criterion and record the evidence: the terms and conditions, the offering document, the distribution record and any trust or paying agent arrangements. A failure on a single criterion can change the tier or remove recognition entirely.

Second, quantify the capital consequence of a downgrade in tier or a loss of recognition. Tier 2 limits and Additional Tier 1 limits constrain how much can count, so the marginal effect on the Capital Adequacy Ratio depends on how close the insurer already sits to those limits.

Third, if a redemption, call or refinancing is planned, check whether the call conditions in the instrument still satisfy the amended criteria and whether MAS approval is required for the planned action. Redemption without replacement can reduce Financial Resources at the same time as a market move reduces other components.

Effect on the solvency ratio and capital planning

The revised Notice 133 does not change the structure of the ratio: Financial Resources are compared with the Total Risk Requirement. The effect arrives through both sides.

On the numerator, the capital instrument criteria determine what counts. On the denominator, the equity adjustment and the revised treatment of structured products and infrastructure change the Total Risk Requirement. For an insurer with a large equity or structured credit allocation, the combined movement may be material, in either direction. For an insurer that is mostly fixed income and has no subordinated debt, the revisions may have little effect and the review can be short.

We recommend four steps in the capital planning cycle.

1. Run an attribution of the ratio on the old and new rules at the latest reporting date, separating the equity adjustment, the structured product and infrastructure changes, and the capital instrument changes, so that the board sees which driver moved the ratio.
2. Rebuild the forward projection used in the ORSA with the adjustment modelled dynamically, and add at least one scenario in which equity markets fall sharply and one in which they rally strongly.
3. Revisit the internal solvency target and the management action triggers. A target set under the previous charge may be too tight or too loose.
4. Check the asset allocation limits in the investment policy against the revised charges, since the relative capital cost of equities, structured products and infrastructure has shifted.

The ORSA is the natural place to record this work. The ORSA should show the board how the revised rules interact with the insurer's risk appetite, which is why the results belong in the next ORSA cycle and not only in the quarterly return.

Reporting, governance and documentation

Changes to a valuation and capital Notice usually flow into regulatory returns, so the reporting team needs the same early notice as the actuaries. Update the calculation templates, reconcile the first return prepared under the revised rules to an independent recalculation, and document the interpretation choices made where the Notice leaves room for judgement.

Governance expectations follow from this. The Appointed Actuary, the chief financial officer and the chief risk officer should each be able to explain the change in the ratio to the board in plain terms. Material assumptions, such as the reference level used to project the equity adjustment, should be approved and recorded. Where an external peer review of the capital calculation is part of the insurer's governance, scope it to cover the revised sections, because the first reporting period under new rules is where errors are most likely.

Foreign insurer branches and captives should confirm which parts of the framework apply to their licence type. Not every insurer is subject to every part of RBC2 in the same way, and the licence conditions determine the applicable requirements.

Practical timeline for the next quarter

A workable sequence for an insurer that has not yet completed the review is as follows.

• Weeks one and two: obtain the revised Notice and circulars, assemble the exposure and instrument data, and identify the funds and instruments in scope.
• Weeks three and four: build or update the calculation, produce the old-versus-new attribution and test it against the most recent regulatory return.
• Weeks five and six: update the ORSA projections and stress scenarios, and propose any change to the internal solvency target and management actions.
• Weeks seven and eight: present the findings to the risk committee and board, and approve any changes to investment limits or capital planning.

None of these steps requires new systems, but each requires a person who owns it and a date.

Next steps

The revised Notice 133 rewards insurers that treat it as a capital planning event and not only as a reporting change. If you want an independent view of how the revisions affect your solvency position, our team can support the attribution analysis, the instrument eligibility review and the ORSA projections through our risk-based capital advisory service.