china

Further underscoring the interest in the reinsurance business from conglomerate and investment organisations in China, Oceanwide Holdings Co., Ltd., a Chinese company, is planning to launch Asia-Pacific Reinsurance Ltd. with 2 billion yuan invested in the start-up reinsurer.

GC Securities, the investment banking and insurance-linked securities (ILS) specialist arm of reinsurance broker Guy Carpenter, has successfully structured and placed the first catastrophe bond covering Chinese risks, Panda Re Ltd. (Series 2015-1).

Category 4 Typhoon Chan-hom is barreling towards the China coast, targeting a landfall somewhere to the south of Shanghai. Chan-hom looks set to be among the strongest typhoon’s ever to strike that area of the country, with its storm surge potential looking ominous.

China Property & Casualty Reinsurance Company (China Re P&C) sees the recently completed $50m Panda Re Ltd. (Series 2015-1) catastrophe bond as a “successful first-step” into alternative risk transfer and the capital markets for the re/insurer.

The first catastrophe bond covering risks in China, Panda Re Ltd. (Series 2015-1), has now completed successfully, raising $50m for the sponsor state-owned reinsurance firm China Re, which was the lower end of the sponsors target size for the deal.

Another milestone has been reached for the catastrophe bond and insurance-linked securities (ILS) market, with the introduction of the first cat bond covering Chinese perils. The Panda Re Ltd. (Series 2015-1) deal covers Chinese quake risks on an indemnity basis.

According to reports in local Chinese news media, the Shanghai Insurance Exchange is nearing approval and the plans will include providing a platform for trading in insurance or reinsurance risks, with securitisation and catastrophes bonds an expected feature.

Two regulatory organisations in China have signed an agreement to establish a group to work on bringing the securitisation of catastrophe insurance risks to the country and to accelerate the adoption of catastrophe bonds for risk transfer needs.

What are the prospects for the use of catastrophe bonds as a tool for insurance and reinsurance risk transfer in China? Broker Willis Group provides some thoughts on what could be an ideal tool for transferring the nation’s massive natural disaster and weather risk.

Asia is home to some of the most vulnerable regions on the globe for natural catastrophes, and the lowest levels of insurance penetration, but according to Munich Re the demand for insurance products in China is on the rise.