Raymond Cheung
Chartered Actuary · CRO · Board Adviser · Singapore
In every CRO role I have held, capital was the conversation that shaped everything else, growth, reinsurance, product decisions, strategic resilience. It should not be confined to the actuarial function. It belongs at the highest level of governance.
Capital strategy belongs in the boardroom of every Singapore insurer, not confined to the actuarial function and surfaced at board level only when a regulatory submission is due. As statutory CRO at AIG Asia Pacific, I sat at the centre of every significant capital decision the organisation made, and what I saw consistently was that the insurers managing capital well were those where the board understood the capital position in strategic terms, not just as a ratio on a compliance slide. Singapore's MAS risk-based capital framework sets minimum capital requirements, but the more consequential decisions, how much buffer to hold above the minimum, how to connect the ORSA stress scenarios to the strategic plan, how reinsurance structure shapes the solvency position, are judgment calls that belong with the board. A board that treats capital as a technical deliverable rather than the foundation of strategic choice is governing from the wrong level.
That is a mistake. Not because actuaries and finance teams are doing their jobs poorly, but because capital decisions are strategic decisions, and strategic decisions belong in conversations where the full commercial, regulatory and competitive context is present. That is the board.
What capital conversations actually decide
When I was CRO at AIG Asia Pacific, capital sat at the centre of every significant commercial decision. Whether we could pursue a specific growth opportunity in a particular market, how aggressively we could underwrite in a cycle, what our reinsurance programme needed to look like, how we structured dividend payments to the parent, all of these were capital conversations before they were anything else.
The organisations that managed capital well were those where the commercial leadership understood the capital implications of their decisions and the capital function understood the commercial context for its recommendations. When those two groups were operating separately, when the actuarial team was producing ORSA outputs that the commercial team did not engage with, or when commercial teams were making growth commitments without understanding their capital cost, the consequences ranged from inefficiency to genuine instability.
“Capital is not a number you report to the regulator. It is the foundation of every strategic choice your organisation makes. Boards that understand this govern differently.”
What boards need to understand
I am not suggesting that board directors need to become actuaries. But they do need enough fluency to ask the right questions, and to recognise when they are not getting clear answers.
- What is our current capital position relative to our regulatory minimum, our internal target and our strategic ambition, and which of those three is actually binding our decisions right now?
- What are the scenarios under which our capital position deteriorates significantly, and what is the lead time for management to respond?
- How does our capital strategy connect to our reinsurance programme, and are we buying the right protection for the risks we actually carry?
- What is the capital cost of our strategic plan, and does the board understand what we are committing to fund?
The ORSA opportunity
The Own Risk and Solvency Assessment, required under regulatory frameworks across Asia,is one of the most important governance documents an insurance organisation produces. It is also one of the most underused at board level. In too many organisations, the ORSA is produced for the regulator and summarised for the board in a way that strips out the strategic content and leaves only the compliance conclusion.
An ORSA done well should be one of the most strategically useful documents the board reviews. It should show the board, in stress-tested terms, what happens to the organisation's capital position under the scenarios most relevant to its business, and it should connect that analysis to the strategic decisions the board is being asked to make. That is the conversation I encourage boards to demand.
Capital strategy is not a finance function deliverable. It is a board-level conversation that happens to be technically complex. The organisations that treat it that way, that invest in building board-level capital literacy and demand that the connection between capital and strategy is made explicit, are better positioned to allocate capital wisely, to respond to stress intelligently, and to grow sustainably. That is what good governance of capital looks like.
Common Questions
What should a Singapore insurance board understand about capital strategy?
Singapore insurance boards are expected by MAS to have meaningful engagement with their organisation's capital position, not just to receive compliance-framed solvency summaries. At a minimum, a board should understand the organisation's capital position relative to its regulatory minimum, internal target and strategic ambition, and which of those three is actually binding current decisions. It should understand the stress scenarios under which the capital position deteriorates significantly and the lead time available for management to respond. And it should understand how capital connects to the strategic plan, including what the capital cost of planned growth is and whether the board is prepared to fund it.
How does the ORSA connect to board governance of insurance capital in Singapore?
The Own Risk and Solvency Assessment, required for Singapore insurers under MAS risk-based capital frameworks, is one of the most important documents a board can use to govern capital, but it is frequently not used that way. A well-executed ORSA shows the board, in stress-tested terms, what happens to the organisation's capital position under scenarios relevant to its business, and connects that analysis to the strategic choices the board is being asked to approve. Singapore boards that receive only a compliance summary of the ORSA, without the underlying scenario analysis and strategic implications, are missing the governance value the document is designed to provide.
What are MAS expectations for Singapore insurance board oversight of capital management?
MAS expects Singapore insurance boards to provide active oversight of capital management, not passive approval of actuarial submissions. The MAS Risk-Based Capital framework and associated guidance requires boards to approve the internal capital target, understand the connection between capital and risk appetite, and satisfy themselves that the ORSA process is genuinely integrated into strategic planning rather than produced as a standalone regulatory deliverable. MAS supervisory reviews assess whether the board is asking substantive capital questions of management, whether the capital function has appropriate independence, and whether capital stress testing is informing rather than merely documenting strategic decisions.
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About the author
Raymond Cheung is a Chartered Actuary, C-suite executive and board adviser with more than 20 years of experience across Asia in risk management, insurance, ESG and corporate governance. He is the CEO of CER Consultancy and an accredited trainer at SMU Academy and the Singapore College of Insurance.