Catastrophe bond issued in HK

The Hong Kong Special Administrative Region Government today welcomed the issuance of insurance-linked securities (ILS) in the form of a catastrophe bond by the World Bank in Hong Kong with a size of US$350 million.


ILS offer protection against losses related to earthquake risks in Chile over the next three years.


Financial Secretary Paul Chan said this is the fourth issuance as well as the inaugural listing of ILS in Hong Kong, bearing testament to the city’s position as an international financial centre and the vibrant development of its insurance industry.


Against the backdrop of a rising trend of catastrophic events caused by climate change, the Hong Kong SAR Government is committed to supporting the Hong Kong insurance sector in offering a greater variety of comprehensive products and solutions to assist the nation and global market players for better management of relevant risks, he added.


A gong-striking ceremony was held at Hong Kong Exchanges & Clearing to mark the inaugural listing of ILS.


Speaking at the ceremony, Secretary for Financial Services & the Treasury Christopher Hui noted that Hong Kong strives to be a facilitator in the national dual circulation strategy by enhancing connectivity with the Mainland and international markets – a goal set out in the Development Roadmap for the Insurance Sector in Hong Kong published earlier.


“Leveraging the dedicated regulatory regime and a pilot grant scheme rolled out early in 2021, we hope to attract more issuing institutions and talent for building up a vibrant ILS ecosystem in Hong Kong. Today’s issuance and listing exactly demonstrate Hong Kong’s unique bridging role.”


The Insurance Authority also welcomed the issuance of ILS by the World Bank, saying the move enhances public awareness on how alternative risk transfer tools could supplement underwriting capacity to increase financial inclusiveness and close protection gaps.


While World Bank Vice President Jorge Familiar said the bank is pleased to partner with the Insurance Authority and the Hong Kong Stock Exchange in the efforts to evolve the ILS market.