China Re firm CPCR issues first cat bond issue from Hong Kong

China Property & Casualty Reinsurance Company (CPCR) has become the first sponsor of a catastrophe bond issued from a Hong Kong domicile – a landmark deal for the insurance-linked securities (ILS) markets.

The bond, issued by Greater Bay Re, provides CPCR with $30 million-per-occurrence typhoon catastrophe protection. A meaningful percentage of the bond’s investors were local to Hong Kong, highlighting the regional support for insurance-linked securities (ILS) as a diversifying asset class.

The deal was structured and placed by Aon Securities, which said the transaction positions Hong Kong as an important gateway for global capital to support sustainable growth in China through non-traditional risk transfer solutions.

CPCR is a non-life reinsurance organization wholly owned by China Re Corporation – the sixth largest global reinsurance group by gross written premiums.

Zhang Renjiang, general manager of China Property & Casualty Reinsurance Company, said: “As the first catastrophe bond to have been issued from Hong Kong, Greater Bay Re represents a significant milestone for the insurance industry in supporting the development of Guangdong-Hong Kong-Macau Greater Bay Area through the provision of typhoon catastrophe protection.”

Paul Schultz (pictured), CEO of Aon Securities, said: “This pioneering transaction demonstrates the potential for Hong Kong to become an important risk transfer hub for the region. The global insurance-linked securities sector has had its strongest year ever, and we believe that solutions such as the CPCR catastrophe bond can only serve to maintain momentum and solidify the position of ILS as an effective component of companies’ risk transfer strategies as they rethink access to capital.”

Qin Lu, CEO of Aon’s Reinsurance Solutions Greater China and Aon’s Commercial Risk Solutions China, added: “We are excited that Aon has brought to market the first catastrophe bond issued from the Special Administrative Region of Hong Kong to provide protection for CPCR’s underlying catastrophe exposures. It is critical that we as an industry continue to develop and apply a range of solutions to close protection gaps for governments, organizations, communities and individuals.”

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