Silk Road Re Limited, the debut disaster bond sponsored just lately by Taiping Re and issued out of Hong Kong, has helped the reinsurance firm obtain “efficient diversification” inside its disaster danger administration, because it appears to pursue a dual-pillar safety method of retrocession and insurance-linked securities (ILS), its CEO stated in the present day.
The corporate additionally hailed the dual-trigger (parametric and industry-loss index) nature of its debut disaster bond issuance, which it calls “pioneering” for a cat bond in Asia.
As we’d revealed back in December, Taiping Reinsurance Firm (Taiping Re), the Hong Kong primarily based reinsurer that’s a part of the state-backed China Taiping Insurance coverage Group, was within the means of sponsoring its first disaster bond, a Silk Highway Re Restricted transaction that might be issued out of Hong Kong.
We then wrote again on December 24th that we’d realized extra particulars concerning the Silk Highway Re cat bond transaction for Taiping Re, particulars which have all been confirmed via in the present day’s official announcement.
The Silk Highway Re disaster bond supplies Taiping Re with a US $35 million three-year supply of multi-peril and multi-territory retro reinsurance, with the protection operating to the top of 2027 and maturity set for early January 2028.
The Silk Highway Re cat bond notes present Taiping Re with retrocession for each Chinese language earthquake danger and US named storm dangers, with a parametric set off used for the China quake cowl and an industry-loss set off for the US named storm safety.
In confirming its first cat bond in the present day, Taiping Re defined that the deal marks “a major step for Taiping Re in enhancing its disaster danger administration capabilities, supporting the event of the nationwide disaster insurance coverage system technique, in addition to strengthening Hong Kong’s function as a global danger administration centre. It additionally supplies priceless expertise for the {industry} in danger diversification mechanism innovation.”
The reinsurance firm additionally famous that, “The Silk Highway Re CAT bond, that includes dual-perils and dual-triggers, is a pioneering initiative not solely in Hong Kong but in addition in Asia.”
The corporate stated that the cat bond issuance gained, “sturdy response from capital markets and famend institutional buyers,” which it stated resulted in “oversubscription” and that the notes provided have been “efficiently priced on the decrease finish of the indicative provide worth vary.”
As we had reported, the US $35 million Silk Highway Re disaster bond notes was priced to pay buyers a danger curiosity unfold of 6%.
As we’d additionally reported, this isn’t a 144A disaster bond issuance, slightly it has been privately positioned we suspect as 4(a)2 notes.
Mr. YU Xiaodong, the CEO of Taiping Re, commented on the reinsurers profitable first cat bond sponsorship, saying, “This issuance marks a major milestone for Taiping Re in accessing the Insurance coverage-Linked Securities (“ILS”) market.
“With Hong Kong’s mature capital market, complete monetary system and sturdy regulatory framework, in addition to assist from Hong Kong Insurance coverage Authority (“HKIA”), skilled service suppliers and world buyers, the issuance has achieved efficient diversification for the corporate’s catastrophic danger administration.
“It additionally promotes the interconnection between the insurance coverage market and the capital market, which highlights Taiping Re’s dedication to innovation and fostering win-win collaboration.”
Taiping Re stated it has dedicated to enhancing its disaster danger administration capabilities, with a objective to assist the constructing of a extra complete disaster insurance coverage system in Hong Kong and Macau and has undertaken various necessary initiatives to realize that, this disaster bond now being added to that record.
“By leveraging its worldwide experience, Taiping Re will actively reply to the problem of local weather change via constructing a “dual-pillar” danger diversification mechanism consisting of each conventional retrocession and insurance-linked securitization. It could additionally facilitate the corporate’s function in addressing the safety gaps, strengthening societal resilience and higher supporting the sustainable improvement of the {industry},” the reinsurance firm defined.
Additionally it is the primary multi-peril cat bond to be issued out of Hong Kong and it takes the whole variety of disaster bonds issued utilizing a Hong Kong domiciled particular function reinsurance automobile to 4 to this point.
You’ll be able to learn all about this new Silk Road Re Limited disaster bond and particulars on each different cat bond ever issued within the intensive Artemis Deal Directory.
