hong kong

Given Hong Kong’s open and sophisticated financial market, along with its distinct connection with the Chinese Mainland and the support of roughly 3,380 family offices, the major city is ideally placed to promote the usage of alternative risk transfer tools and ILS, according to Stephen Yiu, Chairman of the Hong Kong Insurance Authority (IA).

As insurance-linked securities (ILS) continues to gain momentum in Hong Kong, Stephen Yiu, JP Chairman of the Hong Kong Insurance Authority (IA) believes that the market is a “blue ocean” for Hong Kong’s insurance brokers, and an opportunity not to be missed.

The government of Hong Kong is weighing additional incentives to attract more catastrophe bond issuers and investors, following its second annual insurance-linked securities (ILS) conference aimed at promoting the city as a global hub for alternative risk transfer, according to a recent article from South China Morning Post.

Hong Kong’s Insurance Authority (IA) has welcomed the recent issuance of the latest catastrophe bond sponsored by Peak Re, the US $50 million Black Kite Re Limited (Series 2025-1) transaction, while also noting that the deal represents a sign of the maturity under its insurance-linked securities (ILS) regulatory regime.

While the Asia region is expected to see steadily increasing activity in catastrophe bonds and other insurance-linked securities (ILS), Fitch Ratings believes the participation of regional investors needs to increase, while continued development of regulatory frameworks and local expertise is also required.

Hong Kong has now listed the first catastrophe bond notes on its stock exchange, with the World Bank issued $350 million of IBRD – Chile 2023 cat bond notes now housed on the Hong Kong Exchanges and Clearing Limited (HKEX).

The third catastrophe bond transaction to be issued out of Hong Kong is now “in the pipeline” according to the Chairman of the Hong Kong Insurance Authority.

Hong Kong’s Insurance Authority (IA) is set to increase its efforts to promote its nascent insurance-linked securities (ILS) framework and attract more catastrophe bond or ILS issuance activity to the country.

On announcing the completion of the second catastrophe bond issuance domiciled in Hong Kong, the Insurance Authority’s CEO Clement Cheung explained that insurance-linked securities (ILS) are a focus as they gain increasing attention.

Credit risk charges for mainland China insurance and reinsurance company sponsors of catastrophe bonds issued through Hong Kong insurance-linked securities (ILS) structures will be lower than the capital charges applied for ceding risk to reinsurance companies.