Regulatory Disclosures

Risk Management is a core competency and a focus within Allianz, being practiced throughout the organisation across all lines of defence.

The Company’s Enterprise Risk Management consists of:

• Risk Governance: which outlines the hierarchy of decision-making and responsibilities;
• Risk Frameworks: which cover the breadth and depth of our risk management scope;
• Risk Processes: which articulate specific key processes and controls that we practise.

Enterprise Risk Management is closely integrated with capital management and business planning processes.

• Capital adequacy is assessed relative to the Company’s risk profile and risk appetite, including under adverse scenarios.
• Underwriting and reinsurance strategies are evaluated against their impact on risk concentration, volatility, and capital consumption.
• Investment strategies are assessed with reference to their effect on market, credit, and liquidity risks, as well as capital resilience.

Stress testing and scenario analysis are used to assess the Company’s ability to meet policyholder obligations under severe but plausible events.

The Board of Management has ultimate responsibility for the Company’s risk management and approves the overall risk appetite, key risk policies, and material risk limits. The Board is supported by the Risk Committee, which oversees the effectiveness of the ERM framework and receives regular reporting on the Company’s risk profile.

Senior management is responsible for implementing the Board approved risk appetite and ensuring that material risks are actively managed within approved limits.

The Company employs the three lines of defence model in risk governance:

1. First-Line: business managers in their related undertakings; who have ownership, responsibility and accountability for directly assessing, controlling and mitigating risks.
2. Second-Line: independent oversight functions including Risk, Legal & Compliance; which support the Board in defining risk and control frameworks and risk reporting frameworks upon which the business operates.
3. Third-Line: Audit; which regularly performs independent reviews of the implementation and compliance of the risk governance principles and business standards, including an independent assessment on the effectiveness of the first- and second-lines of defence.

The primary goals of the risk management framework are:

• Promotion of a strong risk management culture, supported by a robust risk governance structure;
• Consistent application of the risk capital framework to protect our capital base and support effective capital management;
• Adoption and adherence to MAS’s risk requirements and Allianz’s policies and standards.

The risk management process is based on the following three pillars:

1. Risk Strategy & Risk Appetite: Defines the risk appetite consistent with the Company’s business strategy, ensuring that risks and capital commitments are commensurately rewarded, and that delegated authorities are in line with its overall risk-bearing capacity and strategy.

The Company has established a formal Risk Appetite Framework that articulates the level and types of risks it is willing to accept in pursuit of its strategic objectives. The framework is approved annually by the Board of Management and translated into quantitative and qualitative limits covering, among others:

• Insurance risk (e.g. underwriting and accumulation limits)
• Market and investment risk
• Credit risk
• Liquidity risk
• Operational and Non-Financial risks
• Capital adequacy

Risk appetite metrics are monitored regularly. Breaches and near breaches are escalated in accordance with established escalation protocols, and remedial actions are tracked until resolution.

2. Risk Identification & Underwriting: Develop and maintain a robust system of risk identification and underwriting. The Company’s material risks include, but are not limited to, the following:

• Insurance risk, arising from underwriting activities across its principal business segments. Insurance risk primarily reflects volatility in claims experience, severity, frequency, and exposure accumulation across portfolios.
• Credit risk, including the risk of counterparty default arising from policyholders and intermediaries, investment counterparties, and reinsurance counterparties.
• Market risk, which mainly arises from movements in interest rates, credit spreads and other relevant market movements.
• Liquidity risk, reflecting the risk that the Company may be unable to meet its financial obligations as they fall due, under both normal and stressed conditions.
• Operational risk, encompassing risks arising from inadequate or failed internal processes, systems, human factors, and conduct related matters.
• Emerging risks, including those associated with climate related developments and changes in the regulatory and legal environment.

These risks are managed through a combination of underwriting and pricing discipline, reinsurance arrangements, prudent investment limits, maintenance of liquidity buffers, effective internal controls, and established governance and oversight processes.

3. Risk Reporting & Monitoring: Adopt Allianz Group’s comprehensive qualitative and quantitative risk monitoring and reporting framework, which provides management and shareholder with the transparency into the Company’s risk profile, and the ability to identify emerging issues and risks.

The diagram below provides an overview of the risk management process.

Asset-liability management practices are adopted to ensure the assets are managed with specific reference to the liability characteristics, and consideration to optimise the balance between the returns and risks expectations of the Company.

The Company’s general insurance business primarily covers property & casualty (P&C) insurance, which has shorter-term liabilities and less exposure to interest rate risk. Our ALM approach focuses on maintaining a certain level of liquidity against liabilities to policyholders. The Company’s investment decisions consider the liquidity needs of the claim liabilities in terms of investment duration, interest rate risk and are within the risk appetite and capital resources of the Company.

The Company’s investment objective is to achieve an adequate investment return to satisfy future liabilities, optimise the returns/risks characteristics of the investment assets, and ensuring there is adequate liquidity, with the emphasis on capital preservation, whilst always maintaining compliance with the regulatory requirement of MAS and Allianz Group.

The Company’s investment policy provides the principles and sets out the scope, responsibilities and requirements in the management of investments, ensuring that the interests of policyholders and shareholders are not compromised. As a licensed insurer, the Board exercises its oversight on all investment activities of the Company, through its Investment Committee, that meets regularly to ensure that investments are prudently managed. Strategic asset allocation (SAA) for each insurance fund focuses on asset liability management, and various asset classes are assessed for their potential to create value with medium to long term horizon, while taking into consideration the Company’s risk appetite. This is reviewed periodically to ensure its relevance to evolving market conditions and new developments in the Company.

The company's investment holdings, investment performance, investment risk as well a valuation approach of investment assets are as per set out in the company's financial statements.

The Company maintains a robust capital management framework to ensure that it holds sufficient capital to meet regulatory requirements and to support its business activities on both an ongoing and stressed basis. Capital adequacy is managed with the objective of safeguarding policyholder interests, maintaining financial resilience, and supporting sustainable business growth.

The framework is aligned with the requirements of both the MAS risk based capital (“RBC”) regime and Allianz group capital management practices and is integrated with the Company’s Enterprise Risk Management (“ERM”) framework and business planning processes.

Capital Governance

Oversight of capital adequacy is supported by senior management committees, which regularly review the Company’s capital position relative to regulatory requirements, internal targets, and risk appetite.

The Risk and Finance functions jointly monitor capital adequacy and report to senior management and the Board at regular intervals, with escalation protocols in place where capital metrics approach internal thresholds.

Capital Planning and Monitoring

Capital adequacy is monitored on an ongoing basis against both regulatory and internal capital targets that provide an additional buffer above regulatory requirements. Monitoring covers the main drivers of capital consumption, including underwriting risk, market and credit risk exposures, and operational risk.

Capital planning is conducted as part of the annual business and budgeting process and takes into account:

• Planned underwriting volumes and portfolio mix;
• Reinsurance arrangements and net risk retention;
• Investment strategy and asset risk profile;
• Dividend policy and parental support assumptions, where applicable.

Stress Testing, Forward Looking Assessment, and Capital Contingency Planning

The Company conducts regular stress testing and forward looking assessments as part of its capital management framework and in alignment with its Own Risk and Solvency Assessment (“ORSA”) process. These assessments are designed to evaluate the adequacy and resilience of the Company’s capital position under both normal and adverse conditions over its business planning horizon.

Stress testing and scenario analyses consider a range of severe but plausible events relevant to the Company’s risk profile, including:

• Deterioration in claims experience across key insurance portfolios;
• Adverse movements in interest rates, credit spreads or other relevant market movements affecting the investment portfolio;
• Credit deterioration or default of major counterparties and reinsurers; and
• Liquidity stress scenarios impacting the Company’s ability to meet obligations as they fall due.

The outcomes of these analyses are used to assess the Company’s ability to continue meeting regulatory capital requirements and policyholder obligations and form an integral part of the ORSA, supporting strategic decision making, risk appetite calibration, and capital planning.

In conjunction with stress testing, the Company maintains capital contingency plans that set out management actions available in the event of material capital deterioration. These actions may include constraints on underwriting growth or risk taking activities, adjustments to reinsurance and investment strategies, and access to capital support, where applicable. Capital contingency measures are consistent with ORSA identified vulnerabilities and are reviewed periodically to ensure their ongoing relevance and effectiveness.

The combined results of stress testing, scenario analysis, and contingency planning are reported to Senior Management and the Board and are used to support the Board’s assessment of the Company’s forward looking capital adequacy under the ORSA framework.

Integration with Risk Appetite and Business Decisions

Capital adequacy is closely linked to the Company’s risk appetite and business strategy. The risk appetite framework defines the level of capital risk the Company is willing to accept and is reflected in underwriting limits, reinsurance structures, and investment constraints.

Material business decisions, including entry into new products, significant changes in underwriting strategy, or investment allocation changes, are assessed for their impact on capital adequacy and require approval in accordance with established governance processes.

The Company prepares its audited financial statements based on the Singapore Financial Reporting Standards and will be available at The Accounting and Corporate Regulatory Authority’s (ACRA) website, (acra.gov.sg). The financial statements will cover key information such as valuation methodology of assets and liability and management of liquidity risk, credit risk, currency risk, interest rate risk, equity risk, insurance risk and capital management.

Additionally, the Company’s annual regulatory returns contains information on the Company’s financial performance segmented by insurance funds. The annual regulatory returns will be available at The Monetary Authority of Singapore’s (MAS) website, (mas.gov.sg).