Taiping Re sponsors Asia’s first dual-perils and triggers cat bond in Hong Kong

Taiping Reinsurance Co., Ltd sponsored the issuance of Asia’s first dual-peril, dual-trigger catastrophe bond on 31st December 2024 in Hong Kong, enhancing its catastrophe risk management capabilities.

The $35 million sized cat bond was issued through a special purpose insurer named Silk Road Re and provides coverage for earthquake risks in China and hurricanes in the United States.

The three-year term cat bond provides the firm with $35 million in retrocession coverage and utilises both parametric and industry loss index triggers, providing fully collateralised protection.

The bond has attracted significant interest, not only in Hong Kong but across Asia, receiving strong responses from capital markets and institutional investors. This demand resulted in oversubscription and successful pricing at the lower end of the indicative offer price range.

You can read more on this Silk Road Re cat bond and others, in the Deal Directory of our insurance-linked securities (ILS) focused sister publication, Artemis.

The move aligns with Taiping Re’s strategy to enhance its catastrophe risk management capabilities, support the development of the national catastrophe insurance system strategy, and strengthen Hong Kong’s role as an international risk management centre, explains the reinsurer.

Yu Xiaodong, Chief Executive Officer, Taiping Re, commented, “This issuance marks a significant milestone for Taiping Re in accessing the Insurance-Linked Securities 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.”

In 2024, Taiping Re was one of the inaugural signatories of the “Insurance Industry Climate Charter” launched by the Hong Kong Federation of Insurers.

The company also developed its internal catastrophe risk model under the Hong Kong Risk-based Capital (RBC) regime, which was approved by the HKIA. Additionally, it collaborated with a local university to create the region’s first customised flood catastrophe model, supported by funding from the Innovation and Technology Commission of the Hong Kong SAR Government.

For six consecutive years, the reinsurer has worked with the Macau SAR Government to implement and enhance the Macau Catastrophe Property Insurance Scheme for SMEs. Taiping Re is committed to addressing the climate crisis by establishing a “dual-pillar” risk diversification mechanism, incorporating both traditional retrocession and insurance-linked securitisation.

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