Taiping Reinsurance Co (Taiping Re) announced that it has successfully issued Asia's first dual-peril, dual-trigger catastrophe bond (CAT bond) in Hong Kong.
The reinsurer said that the issuance represents a step forward in Taiping Re’s efforts to enhance catastrophe risk management, align with national catastrophe insurance strategies, and support Hong Kong’s role as an international risk management hub.
The CAT bond was issued through a special purpose insurer, Silk Road Re, and covers earthquake risk in China and hurricane risk in the United States. The three-year bond, valued at US$35 million, uses parametric and industry loss index triggers to provide fully collateralized coverage.
According to Taiping Re, the dual-peril, dual-trigger structure is a first for the region, generating strong interest from institutional investors and resulting in oversubscription. The bond was priced at the lower end of its indicative offer range.
Taiping Re CEO Yu Xiaodong highlighted the significance of the issuance for the company’s catastrophe risk management and its entry into 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,” Yu said.
“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,” Yu said.
In 2024, Taiping Re strengthened its catastrophe risk management initiatives. It became an inaugural signatory of the Insurance Industry Climate Charter introduced by the Hong Kong Federation of Insurers. The company developed an internal catastrophe risk model under the Hong Kong Risk-Based Capital regime, which was approved by the HKIA.
Taiping Re also collaborated with a Hong Kong university to create the region's first customized flood catastrophe model, funded by the Innovation and Technology Commission of the Hong Kong SAR Government. In Macau, the company has supported the local government in managing the Macau Catastrophe Property Insurance Scheme for small and medium enterprises for six consecutive years.
Established in 1980 and headquartered in Hong Kong, Taiping Re is a subsidiary of China Taiping Insurance Group. The company holds an A rating from AM Best, Fitch, and S&P, maintaining the rating for over a decade.
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