Singapore Public Disclosure

Company Profile

Berkley Insurance Company – Singapore Branch (BIC SG) is a branch of the US based Berkley Insurance Company (BIC US) which in turn is a fully owned subsidiary of W. R. Berkley Corporation (WRBC). The registered address of BIC SG is 18 Cross Street, #09-04 Cross Street Exchange, Singapore 048423.

Founded in 1967, WRBC is a property and casualty insurance holding company based in Greenwich, Connecticut, USA. It is listed on the New York Stock Exchange under the symbol “WRB” and is a Fortune 500 company. WRBC’s insurance subsidiaries have AM Best and Standard & Poor’s ratings. BIC US has an AM Best rating of A+ Superior and a Standard & Poor’s rating of A+. For the most updated rating information, please see https://ir.berkley.com/investor-relations/financial-information/ratings/default.aspx.

BIC US is a Delaware corporation licensed to write insurance and reinsurance business and is regulated by the Delaware Department of Insurance. BIC US is directly owned by Star Signet Holdings Inc., a Delaware holding company that is 100% owned by WRBC.

Nature of Business

BIC SG is licensed by the Monetary Authority of Singapore (MAS) under the Insurance Act to carry on general insurance business in Singapore. The general insurance licence was issued by the MAS with effect from 1st July 2016.

Prior to the 2016 licence being granted, BIC SG was only licensed to carry on general reinsurance business in Singapore with its initial licence that was issued in December 2010.

BIC SG pursues a strategy of a niche property and casualty reinsurer focusing on excess of loss and select proportional business for casualty facultative and treaty business. Under the general insurance licence, BIC SG also offers Financial Lines, Marine and Casualty insurance and facultative reinsurance products to selected markets.

Objectives & Strategies

BIC SG’s marketing focus is premised on:

The reinsurance business strategy (operating under the trading name of Berkley Re) is based on:

Products offered include:

The direct insurance business strategy (operating under the trading name of Berkley Insurance Asia) is based on:

Targeted insurance products of Berkley Insurance Asia include:

Regulatory Environment

The operations of BIC SG are subject to the regulatory requirements within the jurisdictions in which it operates. Such regulations not only prescribe approval and monitoring of activities, but also impose certain restrictive provisions, such as capital adequacy requirements, to minimise the risk of default and insolvency on the part of insurance companies to meet unforeseen liabilities as they arise.

BIC SG is subject to regulatory supervision by the Monetary Authority of Singapore.

Governance Framework

In terms of risk governance, BIC SG is part of an Asia Pacific Risk and Governance structure. This includes the BIC Asia Pacific Region Risk Management Strategy (RMS) and Risk Management Framework (RMF) that is in place for identifying and managing risks faced by the business in the course of its operations. The RMS and RMF outlines the processes and results of the implementation of the risk and control framework.

The risk governance framework is based on the “Three Lines of Defence” model. This facilitates and encourages risk identification at all levels within the Company:

The Chief Executive Officers in Australia and in Asia are responsible and accountable to BIC US for the implementation and execution of the RMS and RMF across the Asia Pacific region.

The BIC Asia Pacific Region’s (BIC APAC) governance process is overseen by five governance committees: Risk, Retrocession / Reinsurance, Underwriting (one each for Insurance and Reinsurance operations) and Investments which provide a robust and common governance framework. Each Committee has their own Charter and meet at least four times a year (except the Retrocession / Reinsurance Committee that meets at least twice a year).

Risk Committee

The purpose of the Asia Pacific Region Risk Committee is to assist the Board of BIC US in discharging its responsibility to exercise due care, skill and diligence regarding:

Retrocession / Reinsurance Committee

The purpose of the Retrocession / Reinsurance Committee is to assist the Board of BIC US in discharging its responsibility to exercise due care, skill and diligence regarding the nature, extent, suitability and security of the retrocession / reinsurance arrangements supporting the operations of BIC SG and the controls relating to those arrangements.

Insurance and Reinsurance Underwriting Committees

Two distinct Underwriting Committees have been established in order to maintain a “Chinese Wall” between the Reinsurance and Insurance operations. This segregation is vital to ensure that BIC SG’s client information is not inappropriately shared between the two operations – either expressly or implied.

The purpose of the Reinsurance / Insurance Underwriting Committee is to assist the Board of BIC US in discharging its responsibility to exercise due care, skill and diligence regarding the nature and extent of the underwriting exposures of BIC SG and the controls relating to those exposures.

The Reinsurance Underwriting Committee will discharge its obligations in relation to the reinsurance operations of BIC and represents Berkley Re Australia, Berkley Re Singapore, Berkley Re Hong Kong and Berkley Re Labuan businesses. The Insurance Underwriting Committee will discharge its obligations in relation to the direct insurance operations of BIC and represents Berkley Insurance Australia and Berkley Insurance Asia (Singapore, Hong Kong and Labuan) businesses.

Investment Committee

The purpose of the Investment Committee is to assist the Board of BIC US in discharging its responsibilities to exercise due care, skill and diligence in overseeing the investment activities of BIC SG. This oversight includes a review of:

Management Controls

While it is acknowledged that risks must be taken in order to generate returns, risks taken without employing controls expose the business to greater potential losses than can be tolerated. Subject matter experts across the business have designed processes, procedures, systems and actions in place which assist BIC SG in managing undesirable risk exposures. These processes, procedures, systems and actions / activities are considered BIC SG’s control infrastructure and support the desired high level risk culture.

The following are examples of key controls at BIC SG which are reviewed, monitored and tested for design and operating effectiveness at frequent intervals by the Asia Pacific Risk and Compliance team.

Delegated Authorities

Peer Reviews / File Audits

Guidelines, Policies and Procedures

Financial and Actuarial Key Controls Testing

Risk Appetite

BIC SG has approved a risk capacity that is to be utilised to achieve its objectives and goals. The risk appetite is the aggregation of individual risk capacity subject to any overlaying of catastrophe modelling and reinsurance coverage applicable to the risks to reduce this aggregation.

BIC SG has a conservative risk appetite and it maintains prudent levels of capital and liquidity and generally does not engage in business activities that include high risk activities.

BIC SG underwrites a subset of individual risks of WRBC that are laid out in the annual business plan. This subset of risks is monitored separately by BIC APAC management, and also provided to WRBC for inclusion in the monitoring of the Group risk appetite.

BIC SG’s risk appetite statement establishes a common understanding between BIC APAC management and the views and expectations of WRBC regarding desirable risks underlying the execution of BIC SG’s strategy. The expression of risk appetite enables BIC APAC management to establish appropriate limits on risk-taking activities at BIC SG.

Certain risk measures and tolerances have been developed and are monitored on a regular basis via the Risk Committee. Risk measures and tolerances have been established for:

Asset-Liability Management

BIC SG’s objective, as stated in the Investment Policy, is to maintain an investment portfolio with assets having weighted average durations that are matched to the duration and cash flow profile of our insurance liabilities, to the extent practicable. However, as is currently necessary, BIC SG’s investment portfolio will be managed to cater for ongoing liquidity requirements whilst still achieving suitable capital coverage positions.

Capital Management Strategy

The BIC SG Capital Management Strategy is to ensure that there is sufficient capital to provide a buffer to absorb unanticipated losses while still continuing to meet its insurance obligations. In practical terms, BIC SG targets a Capital Adequacy Ratio (CAR) of between 160% and 200%.

In addition to the target range of capital adequacy which BIC SG seeks to operate within under normal circumstances, senior management has also determined a set of trigger points and associated management actions that are to occur should capital adequacy move outside the target range. These trigger points and management actions are:

Capital adequacy is monitored monthly in order to gauge if any capital injections are required. Management keeps BIC US updated on any material developments that might warrant additional capital.

The MAS sets minimum requirements with regards to capital adequacy such that the financial resources of a licenced insurer are not less than a percentage of total risk requirements or SG$5M whichever is the greater. BIC SG has met this requirement at all times during the 2019 year.

Regulatory capital of BIC SG was 214% as of 31st December 2019 and 231% as of 31st December 2018.

Investments

BIC SG has established an Investment Policy that sets out the investment guidelines to be adopted in respect to both the “onshore” and “offshore” portfolios in Singapore.

The objectives of the investment policy are to:

The investment policy outlines the universe of allowable investments and follows a conservative investment approach focussing on fixed income government, sovereign, multilateral and statutory issued bonds.

The portfolio duration will be determined based on the estimated duration of insurance liabilities. Proxies have been established to measure our portfolio management against. These proxies can be varied, by agreement with the BIC APAC Investment Committee, if there is a liability mismatch or having regard to the size and asset spread of the portfolio and cash flow requirements.

The portfolio duration may vary from the benchmark duration by up to 25%.  Portfolio duration targets and liquidity requirements will be determined on an on-going basis in response to the liability profile information as it develops.

Additional Information

Additional information on BIC SG can be found as follows: