Hong Kong issues new cat bond for Jamaica storm risks

Hong Kong issues new cat bond for Jamaica storm risks | Insurance Business Australia

Insurance News

Hong Kong issues new cat bond for Jamaica storm risks

It is the city state’s fifth ILS issuance since 2021

Insurance News

By
Kenneth Araullo

The Hong Kong Insurance Authority (HKIA) has announced the issuance and listing of a $150 million catastrophe bond in Hong Kong, aimed at providing protection against storm risks in Jamaica for the upcoming four hurricane seasons.

This catastrophe bond, issued by the International Bank for Reconstruction and Development (IBRD), part of the World Bank Group, is part of efforts to bolster Jamaica’s financial resilience against potential hurricane damage.

Jorge Familiar, vice president and treasurer at the World Bank, highlighted the significance of this financial instrument.

“This catastrophe bond serves as another example of how developing countries can mitigate disruptive economic impacts brought by natural disasters,” Familiar said.

He further expressed pride in the partnership with the HKIA to enhance the insurance-linked securities (ILS) market for their clients.

Clement Cheung, CEO of the HKIA, also commented on the broader implications of this new catastrophe bond.

“This issuance of insurance-linked securities shows clearly that we care for and are willing to support economies in mitigating the risks arising from natural disasters,” Cheung said. “Going forward, we will dedicate efforts to forging an ecosystem that nourishes institutional investors, data modeling capabilities, and professional talent.”

Since the introduction of a bespoke regulatory regime and a pilot grant scheme in 2021, there have been five ILS issuances in Hong Kong, totaling $713 million, according to HKIA.

Additionally, in 2023, Hong Kong facilitated its fourth ILS issuance and its first public listing, with the IBRD issuing a $350 million catastrophe bond. This bond, listed on Hong Kong’s stock exchange, is designed to cover earthquake risks in Chile for the next three years, providing financial protection against potential earthquake-induced losses.

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