The Monetary Authority of Singapore (MAS) has now confirmed details of the refresh and extension of its insurance-linked securities grant scheme, with grants now available to cover some of the upfront costs of issuance for catastrophe bonds covering risks outside of the Asia Pacific region, as well as for other ILS arrangements.The refresh and extension of the ILS Grant Scheme terms were teased in a speech by a Monetary Authority of Singapore executive last week., having made its ILS grant scheme more restrictive back in 2023, to only offer it to catastrophe bonds or ILS covering regional risks from Asia Pacific, the ILS grant offering is now being expanded again to cover cat bond risks from other locations around the globe.Previously, to mean the risks featured in any cat bond or ILS that could benefit from the grant needed to come from the Asia Pacific region, or the sponsor needed to be located there.

At the same time the grant was made available through to the end of 2025.After that tightening of the ILS grant scheme terms, the number of catastrophe bonds issued out of Singapore slowed and since June 2022 just five cat bond issues had come to market, from Japanese insurer sponsors and the NZ Earthquake Commission, as well as a number of sidecar renewals from MS Amlin Asia Pacific.Now, the ILS Grant Scheme has been extended and for the new period from January 2026 through to the end of 2028, it will provide grants to a wider range of transactions.

Different amounts of grant subsidy will be available for transactions depending on the perils they cover from January.For new issuances of catastrophe bonds: For new issuances of collateralised reinsurance and sidecar arrangements, the grant could be as much as 70% funding (capped at S$500,000) of upfront issuance costs.For all insurance-linked securities renewal transactions, regardless of type, then as much as a 30% grant (capped at S$500,000) of upfront issuance costs could be available.

Importantly, Singapore’s ILS Grant Scheme remains widely available to cat bond and ILS transactions covering a full-range of perils, so for issuances covering any forms of risks, including natural catastrophes, longevity, mortality, operational risks, and cyber-risks, the Monetary Authority of Singapore explained.Qualifying issuers (which we believe means sponsors, not the issuer of the ILS notes) can be companies and financial institutions based onshore or offshore, including multilateral organisations.It’s a significant broadening of the catchment area for transaction sponsors that could benefit from the Singapore ILS grant, so this may prove attractive to those looking to reduce their issuance costs for catastrophe bonds, sidecars and other collateralised reinsurance arrangements.

It will be interesting to see whether this can attract more catastrophe bond and ILS activity to Singapore in 2026 and beyond.Questions remain over whether subsidies can ultimately build-up sustainable ILS market activity levels in a country, rather than just attract those looking to save money.We’ve seen before how issuers came to Singapore while their transactions qualified for the grant, but as soon as the terms of the grant tightened to the APAC risk only focus the majority did not return and have instead used Bermuda again for their cat bonds since.

Domiciles need to work towards becoming just as (or more) efficient and attractive to sponsors as established ILS market hubs, if they are to hold onto any activity gained through the offering of issuance cost subsidies.Retaining and renewing issuance, so growing the marketplace over time, will be the real signal of success..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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