Insurance Authority welcomes the second issuance of insurance-linked securities

3 June 2022

The Insurance Authority (IA) today (3 June 2022) welcomed the second issuance of insurance-linked securities (ILS) in Hong Kong. This takes the form of a catastrophe bond amounting to US$150 million (equivalent to around HK$1.18 billion) sponsored by Peak Reinsurance Company Limited via Black Kite Re Limited, another authorized special purpose insurer, structured to cover industry losses inflicted by typhoons in Japan.

“With the impact of climate change vividly felt around the world, ILS is gaining prominent attention as an effective tool for risk transfer and a class of alternative investment. Following the inaugural issuance pioneered by a Mainland reinsurer in October last year¹, we have detected keen interest from a diverse spectrum of potential sponsors,” said Mr Clement Cheung, Chief Executive Officer of the IA.

“In realising the aspiration of Hong Kong to become a global risk management centre, we will sustain efforts in building a vibrant ILS ecosystem, thereby enhancing underwriting capacities, strengthening financial resilience and bridging protection gaps,” he added.

This issuance is eligible for the Pilot Insurance-linked Securities Grant Scheme rolled out by the Government in May 2021 that offers up to HK$12 million of subsidy for each application.

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¹  For details of the inaugural ILS issuance in Hong Kong, please refer to the relevant press release.