Insurance Authority welcomes Silk Road Re cat bond, sixth under Hong Kong ILS regulations
Hong Kong’s Insurance Authority (IA) has welcomed the recent issuance of the latest and sixth catastrophe bond under its insurance-linked securities (ILS) regulatory regime, saying the US $35 million Silk Road Re Limited cat bond sponsored by Taiping Re reinforces its commitment to the sector.
As we’ve been reporting, Taiping Re secured a three-year source of fully-collateralized retrocessional reinsurance through its debut Silk Road Re catastrophe bond.
The Silk Road Re cat bond notes provide Taiping Re with protection for losses from both Chinese earthquake risk and US named storm risks, while the structure utilises both parametric and industry loss triggers.
As a result, the Silk Road Re catastrophe bond is the first multi-peril and territory issuance to come out of Hong Kong and also the first cat bond issued under the Hong Kong ILS regulatory regime to feature multiple triggers.
An Insurance Authority of Hong Kong spokesperson stated, “This is the sixth insurance-linked securities (ILS) issued in Hong Kong and the first locally-issued ILS tied to multiple perils and triggers.
“It reinforces our commitment to forging a holistic ecosystem that embraces data harvesting, catastrophe modelling, product design, investor education and talent nurturing as well as to narrowing the protection gap caused by the rising frequency and intensity of natural catastrophes.”
The Silk Road Re catastrophe bond is the fourth to be issued using a Hong Kong regulated special purpose reinsurance vehicle, the other two issuances having been World Bank IBRD cat bonds that saw their notes listed on the Hong Kong Exchange.
As a result, the six ILS issuances that have now taken place since the introduction of a bespoke regulatory regime
and a pilot grant scheme for insurance-linked securities in 2021, have featured a total sum of US $748 million of cat bond notes.
Some US $247.5 million of that total was issued using Hong Kong domiciled and regulated SPRV structures.
These were China Re’s $30 million Greater Bay Re Ltd. (Series 2021-1) cat bond, Peak Re’s $150 million Black Kite Re Limited (Series 2022-1) which was the first 144A cat bond issued out of Hong Kong, and PICC Property and Casualty Company Limited’s $32.5 million Great Wall Re Limited deal, as well as the new $35 million Silk Road Re Limited for Taiping Re.
Hong Kong has also seen the notes from the World bank facilitated $350 million IBRD – Chile 2023 cat bond listed on its stock exchange in 2023, and also the notes from the $150 million IBRD CAR Jamaica 2024 cat bond listed earlier this year.
