Hong Kong and the mainland China metropolis and monetary hub of Shanghai wish to co-operate on a spread of economic initiatives, with one in every of them being insurance-linked securities (ILS).
Insurance coverage and reinsurance market co-operation is without doubt one of the areas of focus, however so too is the realm the place reinsurance and capital markets collide.
There are going to be a collection of measures carried out that assist to develop mutual entry to every others capital markets, with a deepening of co-operation between the securities markets of the 2 cities a key purpose.
Insurance coverage-linked securities (ILS), reminiscent of disaster bonds, might be an acceptable space to focus, bringing collectively capital market securities and reinsurance, that are two areas the place co-operation between Hong Kong and Shanghai is hoped to deepen.
Common conferences are set to be held, led by the Monetary Providers and the Treasury Bureau of the Hong Kong Particular Administrative Area Authorities and the Shanghai Workplace for Advancing Worldwide Monetary Middle Growth.
Talking at a current occasion, the Secretary for Monetary Providers and the Treasury of Hong Kong, Christopher Hui, defined, “Our initiatives in insurance-linked securities (ILS) have marked vital developments. Since establishing a devoted regulatory regime and pilot grant scheme in 2021, we have now efficiently facilitated the issuance of 4 disaster bonds, totalling US$560 million.
“The aim of those monetary devices is to supply a safeguard towards the monetary repercussions of pure disasters reminiscent of typhoons and earthquakes, each inside the Mainland and in different elements of the world.
“We additionally welcomed the inaugural itemizing of an ILS in Hong Kong, and attempt to draw extra issuing establishments {and professional} expertise, with a view to fostering the ILS ecosystem and increasing diversified channels for danger administration.”
Only in the near past, Hong Kong secured a second itemizing of a World Financial institution disaster bond on the native alternate, because the Jamaica disaster bond was listed there.
Highlighting the significance of integration and co-operation between Hong Kong and the Chinese language mainland, Hui mentioned, “We see great potential to reinforce connectivity between the Mainland and Hong Kong insurance coverage markets.”
Hui additionally famous that, “As we give attention to regional integration and the enlargement of insurance coverage providers, we’re equally dedicated to making sure the sustainability and resilience of the insurance coverage sector via regulatory enhancements.”
Hong Kong has all the time had a spotlight inside its reinsurance and ILS market initiatives to hunt higher integration with Chinese language insurers and potential sponsors of disaster bonds.
Only a fortnight in the past, executives from the Insurance coverage Authority of Hong Kong famous the significance of aligning the nations ILS ambitions with these of China, in saying that creating capital market catastrophe danger switch services for native insurers and reinsurers, in addition to for municipalities in China, can be a spotlight.
It’s encouraging to see the main focus persevering with, inside the broader efforts to co-operate with Shanghai.
It’s additionally notable that, in current months, our sister publication Reinsurance Information reported that the Shanghai Insurance coverage Trade (SIE) launched a global reinsurance enterprise buying and selling platform, and that it shortly signed its first inward enterprise settlement shortly after.
On the itemizing of the Jamaica cat bond from the World Financial institution’s IBRD, Clement Cheung, Chief Govt Officer of the IA mentioned, “The residents in Hong Kong aren’t any stranger to the devasting affect of tropical cyclones. This issuance of insurance-linked securities (ILS) reveals clearly that we take care of and are keen to help economies in mitigating the dangers arising from pure disasters.
“Going ahead, we are going to dedicate efforts to forging an ecosystem that nourishes institutional traders, information modelling capabilities {and professional} skills.”
