, the debut catastrophe bond sponsored recently by Taiping Re and issued out of Hong Kong, has helped the reinsurance company achieve “effective diversification” within its catastrophe risk management, as it looks to pursue a dual-pillar protection approach of retrocession and insurance-linked securities (ILS), its CEO said today.The company also hailed the dual-trigger (parametric and industry-loss index) nature of its debut catastrophe bond issuance, which it calls “pioneering” for a cat bond in Asia.As we’d , Taiping Reinsurance Company (Taiping Re), the Hong Kong based reinsurer that is part of the state-backed China Taiping Insurance Group, was in the process of sponsoring its first catastrophe bond, a Silk Road Re Limited transaction that would be issued out of Hong Kong.We then that we’d learned more details about the Silk Road Re cat bond transaction for Taiping Re, details which have all been confirmed through today’s official announcement.

The Silk Road Re catastrophe bond provides Taiping Re with a US $35 million three-year source of multi-peril and multi-territory retro reinsurance, with the coverage running to the end of 2027 and maturity set for early January 2028.The Silk Road Re cat bond notes provide Taiping Re with retrocession for both Chinese earthquake risk and US named storm risks, with a parametric trigger used for the China quake cover and an industry-loss trigger for the US named storm protection.In confirming its first cat bond today, Taiping Re explained that the deal marks “a significant step for Taiping Re in enhancing its catastrophe risk management capabilities, supporting the development of the national catastrophe insurance system strategy, as well as strengthening Hong Kong’s role as an international risk management centre.

It also provides valuable experience for the industry in risk diversification mechanism innovation.” The reinsurance company also noted that, “The Silk Road Re CAT bond, featuring dual-perils and dual-triggers, is a pioneering initiative not only in Hong Kong but also in Asia.” The company said that the cat bond issuance gained, “strong response from capital markets and renowned institutional investors,” which it said resulted in “oversubscription” and that the notes offered were “successfully priced at the lower end of the indicative offer price range.” As we had reported, the US $35 million Silk Road Re catastrophe bond notes was priced to pay investors a risk interest spread of 6%.As we’d also reported, this is not a 144A catastrophe bond issuance, rather it has been privately placed we suspect as 4(a)2 notes.Mr.

YU Xiaodong, the CEO of Taiping Re, commented on the reinsurers successful first cat bond sponsorship, saying, “This issuance marks a significant milestone for Taiping Re in accessing the Insurance-Linked Securities (“ILS”) market.“With Hong Kong’s mature capital market, comprehensive financial system and robust regulatory framework, as well as support from Hong Kong Insurance Authority (“HKIA”), professional service providers and global investors, the issuance has achieved effective diversification for the company’s catastrophic risk management.“It also promotes the interconnection between the insurance market and the capital market, which highlights Taiping Re’s commitment to innovation and fostering win-win collaboration.” Taiping Re said it has committed to enhancing its catastrophe risk management capabilities, with a goal to support the building of a more comprehensive catastrophe insurance system in Hong Kong and Macau and has undertaken a number of important initiatives to achieve that, this catastrophe bond now being added to that list.

“By leveraging its international expertise, Taiping Re will actively respond to the challenge of climate change through building a “dual-pillar” risk diversification mechanism consisting of both traditional retrocession and insurance-linked securitization.It would also facilitate the company’s role in addressing the protection gaps, strengthening societal resilience and better supporting the sustainable development of the industry,” the reinsurance company explained..

It is also the first multi-peril cat bond to be issued out of Hong Kong and it takes the total number of catastrophe bonds issued using a Hong Kong domiciled special purpose reinsurance vehicle to four so far.You can read all about this new catastrophe bond and details on every other cat bond ever issued in the extensive Artemis Deal Directory..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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