Greater Bay Re Ltd. (Series 2021-1)

This $30 million Greater Bay Re Limited Series 2021-1 catastrophe bond is the first successful issuance to use Hong Kong as a domicile.

China Property and Casualty Reinsurance Company (China Re) is the sponsor and with this arrangement the reinsurer has secured a $30 million source of reinsurance protection against Chinese typhoon risks from the capital markets.

As we explained back in June, the Greater Bay Re Limited special purpose issuance vehicle had been registered in Hong Kong and we knew at the time that the sponsor would be China Re P&C.

Greater Bay Re Limited has issued a single $30 million tranche of Series 2021-1 cat bond notes, which were structured as zero-coupon notes and sold to a small group of cat bond investors, we understand.

Aon Securities acted as the sole structuring agent and bookrunner for this issuance.

The $30 million of notes will provide China Re with a one year source of retro reinsurance protection against certain losses from Chinese typhoons, on an indemnity trigger and per-occurrence basis. Coverage includes the Greater Bay region and other areas of high exposure to typhoons, we understand.

Maturity of the notes is expected in October 2022, we’re told.

Being zero-coupon in nature, the $30 million of notes issued by Greater Bay Re were priced at 96.96 of par, we’re told, which would imply a rough coupon equivalent of 3.04%.

This is a notable achievement for Hong Kong, which has managed to get its first cat bond to market in the same year as its regulatory regime for insurance-linked securities (ILS) was completed.

Aon Securities said, “A meaningful percentage of the bond’s investors were local to Hong Kong, highlighting the regional support for insurance-linked securities (ILS) as a diversifying asset class.”

Aon Insurance Managers, the specialist insurance management unit of the broker, is manager of the Greater Bay Re Limited structure for the sponsor and also acting as one of the directors. This work was led by the Aon Insurance Managers team in Singapore, with support from Bermuda.