Credit Ratings of Life Insurers in Singapore 2020

This is a follow-up from a post 3 years ago, where I compiled the credit ratings of the life insurers in Singapore, to have an idea of the differences in terms of their credit worthiness.

Flawed Assumption

People often think that life insurers and the policies they issue are homogeneous (the same), and often compare benefit illustrations as if two companies are going to make the exact same amount of profits, exact same amount of investment returns, have the exact same amount of business operating costs, and et cetera.

How far away from the truth that flawed assumption can be. 

Every life insurer holds a different asset mix in their insurance funds, and have different profits/returns/costs. Even their shareholders may demand a different dividend rate on their shares.

Therefore it is not surprising that life insurers with larger assets and bigger operations in Singapore tend to be the ones rated higher by Standard and Poors (S&P), one of the foremost rating agency in the world ( These top-ranked insurers also have been operating in Singapore for several decades.

What do S&P credit ratings mean?

This set of S&P ratings is an assessment of the insurer's financial security, and its ability to pay its obligations under its insurance policies.

For a sense of perspective, our 3 local banks are rated AA-, and 6 life insurers hold the same rating, and you can say they are on par with them when it comes to financial stability.

You might notice that late entrants FWD and Singapore Life are the only insurers with credit rating in the Bs, significantly lower than other more established brands. 

Once again this shows that insurance companies are not all the same, and cheaper doesn't necessarily mean better. 

Never assume policy illustrations are alike

Hence the next time you are choosing an insurance policy, remember that although the policy illustrations from two different insurers may show the same projected investment rate of return of 4.75%/3.25%, these are only arbitrary figures put in place to adhere to Life Insurance Association's requirement. The actual return of the insurers may vary, depending on a myriad of factors, and this is ultimately what affects the policy's long term values.

PS: Regardless of credit rating, the Guaranteed values of your life insurance policies are protected by the Policy Owner's Protection (PPF) Scheme, which I shall elaborate on a future post.