Insurer Participating Fund Expenses Need More Transparency

Investment-linked plan and participating fund expense ratios are still not directly comparable across insurers because insurers differ on what they include in the calculation.  What one insurer counts, another may not.  These are still expenses every insurer shares in common: marketing, management fees, taxes, and other costs, all bearing some relationship to fund performance regardless of how each insurer labels them.  Some insurers still release an aggregated figure across all their funds, leaving policyholders without an accurate picture of how any single fund performs.  This needed standardising in 2021.  It still does now.

What MAS and LIA Regulate

MAS Notice FAA-N16 sets requirements and standards for life insurers as product providers, covering disclosure, investment guidelines, borrowing limits, and operational practices specifically for investment-linked policies.  This governs how insurers must present product information to clients.  It does not mandate a single, standardised method for calculating the total expense ratio itself.

The Life Insurance Association of Singapore’s own Guidelines on Policy Illustrations address a related but separate problem: the bonus rates insurers illustrate to policyholders.  Insurers must show two rates, an Upper Illustration Rate and a Lower Illustration Rate, both net of investment expenses, with the higher rate reviewed by LIA once every three years and capped at a prescribed maximum.  This standardises what a policyholder sees on the return side of the ledger.  It says nothing about standardising how each insurer calculates the expense figures netted out of that return in the first place.

LIA has built a working framework for standardising illustrated bonus rates, reviewed periodically, capped consistently, and comparable across insurers on that specific metric.  No equivalent framework exists forcing every insurer to calculate and disclose participating fund expenses using the same methodology.  A policyholder can compare two insurers’ illustrated returns fairly.  He still cannot compare what those two insurers actually deducted to arrive at that return, because nothing requires them to deduct it the same way, or disclose it at the same level of granularity.

A total expense ratio that hides behind aggregated, fund-wide reporting tells a policyholder nothing about the specific fund his own premium sits inside.  Two insurers can report similar headline expense ratios while running completely different cost structures underneath, one heavy on distribution cost, another heavy on fund management fees, and a policyholder comparing the two numbers side by side has no way of knowing which insurer is actually cheaper to hold money with over twenty years.

Great Eastern: The Closest Thing to the LIA Definition

Great Eastern Life Assurance Co. Ltd, the oldest life insurer in Singapore, founded in 1908 and the only one listed on the Singapore Exchange, publishes its definition in its own annual participating fund update.  Its Total Expense Ratio is defined as “the proportion of total expenses incurred by the Fund to the assets of the Fund,” explicitly naming investment, management, distribution, and tax costs as the components included.  Great Eastern’s fund stood at S$53.5 billion as of 31^st December 2024.  This is the clearest published methodology among the major insurers.

AIA: Headline Figures

AIA Singapore’s own participating fund updates disclose a single Total Expense Ratio figure alongside bonuses and dividends declared, investment returns by currency, and total assets.  AIA projected S$540 million in bonuses and dividends for 2024.  What AIA’s public commentary does not do, at least not with the same explicit breakdown Great Eastern provides, is itemise which cost categories sit inside that headline percentage.  This is because AIA has many major fund partners, and the cost of working across jurisdictions and international markets to put together a number for the lower end of the market does not make sense.  That is, itself, a cost.  The average client of AIA Singapore is from the mass affluent and HNW market.  They are accredited investors, and an itemised distribution cost matters less than the return on investment.

This knowledge gap is irrelevant once AIA’s market position is factored in.  AIA posted a 15 per cent jump in Value of New Business in 2024, has been named best employee-benefits provider for 19 consecutive years, and maintains a solvency ratio above 250 per cent.  Its bancassurance partnership with Citibank specifically targets affluent clients.  This client base skews toward affluent and high-net-worth policyholders working with dedicated financial services consultants, not retail buyers reading a fund commentary in isolation.  A client at this level typically has an adviser positioned to interrogate the underlying numbers directly and benchmark them against competing products.

Manulife: Granular on Dollars, Less Clear on a Single Ratio

Manulife took a different approach in its 2024 update, disclosing specific dollar figures rather than leading with a single expense ratio.  Benefit payments totalling S$1,268 million were paid from the Participating Fund in 2024, equivalent to 5.1 per cent of the fund’s ending balance, and management expenses were separately itemised at S$58 million.  This gives a policyholder real, specific numbers to work with.  It does not, in the same breath, hand him a single comparable Total Expense Ratio figure the way Great Eastern’s definition does, which makes cross-checking Manulife against a competitor considerably more work than it should be.

Prudential: A Third Model

Prudential discloses a Total Expense Ratio of 1.69 per cent across multiple 2025 sub-fund updates, including Par Single Premium, PruInvestor, and Par Retirement.  To its credit, Prudential states the investment, management, distribution, taxation, and other expenses, matching Great Eastern’s level of definitional clarity.

Prudential’s own 2023 disclosure explains, “This Total Expense Ratio is computed at the total Participating Fund level and includes all participating sub-funds.”  This is the aggregation problem.  A policyholder in PruInvestor and a policyholder in Par Retirement see the same expense figure, regardless of whether their specific sub-fund costs the same to run.  Prudential deserves credit for stating this openly in a footnote.  It does not change the underlying fact that a policyholder still cannot see his own sub-fund’s actual expense burden in isolation.  But then, Prudential is in the same segment of the market as AIA.  These numbers do not matter to their target market.

The Independent Comparison

An independent review by financial commentary site DareToFinance attempted to compile expense ratios across several Singapore insurers for 2025, and the spread it found was striking.  Tokio Marine reported an expense ratio of just 0.6 per cent.  Singlife reported 3.2 per cent, more than five times higher.  The review’s own conclusion is that a lower expense ratio means more money stays in the policyholder’s own pot.

How This Translates into Market Share

Great Eastern led the market in 2024 with S$13.2 billion in gross premiums, backed by S$117 billion in total assets and financial strength ratings of AA- from S&P and AA from Fitch.  Singapore’s total weighted new business premiums reached S$6.53 billion in 2025, up 11.3 per cent year-on-year.  AIA’s own 15 per cent Value of New Business growth in 2024 shows an insurer gaining share at the affluent end of the market, the segment where granular disclosure matters less because professional intermediation fills the gap.  Great Eastern’s disclosure leadership has not translated into dominance across any specific metric, while AIA’s growth comes from a segment structurally better equipped to work around a disclosure shortfall than the mass market that Great Eastern and others such as Singlife and Manulife also serve.

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Terence Nunis | Executive Chairman, Equinox Zenith | Author, The 1% Playbook: The Billionaire Cheat Code