hong kong

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.

The availability of robust data sets and information on losses will be key for Hong Kong and China to deliver on their goals for insurance-linked securities (ILS) market development, according to speakers at a recent conference.

Carrie Lam, Chief Executive of the Government of Hong Kong, sees “enormous potential” for catastrophe bonds and insurance-linked securities (ILS) to provide important disaster risk capital to underpin risks in the Greater Bay Area.

The inaugural catastrophe bond issuance in Hong Kong is a clear vote of confidence in the Special Administrative Region (SAR) and a sign of the exciting opportunities that lie ahead, according to regulator the Insurance Authority (IA).

The first catastrophe bond to be issued out of Hong Kong positions the emerging insurance-linked securities (ILS) domicile as a gateway to global institutional capital for China’s risk transfer and reinsurance needs, according to Aon Securities, who also highlighted that local investors participated in the transaction.

The issuance of the first catastrophe bond through Hong Kong has helped to open up a new channel for risk diversification for the domestic catastrophe insurance market, according to the sponsor of the Greater Bay Re Ltd. (Series 2021-1), China Re Group.

The very first catastrophe bond to be issued out of Hong Kong has now been completed, with a $30 million Greater Bay Re Ltd. (Series 2021-1) cat bond coming to market on behalf of sponsoring reinsurer China Re.