King & Wood Mallesons (KWM) advised China Property and Casualty Reinsurance Company Ltd. (China Re P&C) as the sponsor on its establishment of Greater Bay Re Limited, the first Hong Kong-incorporated special purpose insurer (SPI) authorised by the Insurance Authority to issue insurance-linked securities (ILS) in Hong Kong. Aon Securities acted as the arranger and insurance manager for the transaction.
This marks the first-ever SPI authorisation approval granted by the Insurance Authority and the issuance of the first catastrophe bond in Hong Kong by Greater Bay Re Limited, which provides protection against typhoons in the Mainland. Investors included a mix of regional and local investors. The successful launch of this transaction reflects the strong foundation of the legislative and regulatory framework for ILS in Hong Kong, which paves the way for Hong Kong to tap into the burgeoning Mainland China reinsurance market and to become a leading domicile for issuing ILS including catastrophe bonds.
Promoting the use of ILS has been a key focus for Hong Kong, particularly with the insurance sector positioned as one of the key pillar industries in the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area released in 2019. The KWM team has been closely following this development and published a series of articles on the ILS regime in Hong Kong with the most recent article “Rise of the Hong Kong ILS market – Insurance Authority publishes Guidelines on Application to carry on Special Purpose Business”.
China Re P&C is a wholly-owned subsidiary of China Reinsurance (Group) Corporation, one of the largest and only state-owned reinsurance companies in China with a global footprint in major business locations across Beijing, London, Hong Kong SAR, Singapore, and New York, and the largest company in the PRC that specialises in providing domestic property and casualty reinsurance services.
KWM acted for the sponsor in respect of Hong Kong law, together with Cadwalader, Wickersham & Taft LLP as offshore deal counsel. The KWM team was led by partners Richard Mazzochi, Minny Siu, and Cindy Shek.
Any reference to “Hong Kong” or “Hong Kong SAR” shall be construed as a reference to “Hong Kong Special Administrative Region of the People’s Republic of China”.