Captive Insurance Industry News | Hong Kong issues first ILS catastrophe bond
Greater Bay Re, the first special purpose insurer (SPI) licensed in Hong Kong, pioneered the issuance of insurance-related securities (ILS) in the form of a catastrophe bond.
The bond was made available by China Re and the China Property and Casualty Reinsurance Company.
It provides protection against losses suffered as a result of typhoons in mainland China as a result of the increased frequency and severity of natural disasters.
The show was facilitated by a regulatory regime for SPIs launched by the Insurance Authority (IA) in March this year, as well as the ILS pilot grant program under the 2021-2022 budget that subsidizes costs. upfront up to HK $ 12 million for each qualifying transaction.
The IA notes that the ILS is an “effective tool” for mitigating the risks associated with such events, as it is not as sensitive to business cycles as commercial insurance products.
Clement Cheung, CEO of IA, comments: “This decision by a leading public reinsurer not only illustrates Hong Kong’s potential and attractiveness as an emerging ILS hub, but also demonstrates our crucial role as a hub. global risk management.
“By taking full advantage of the explicit support provided by central government, we will intensify our efforts to nurture a vibrant ILS ecosystem, playing our role in increasing underwriting capacities, improving financial resilience and narrowing the gaps. protection. “
The IA last month highlighted how Hong Kong can take advantage of its captive home status and reinsurance to consolidate its position as a global risk management center.