Hong Kong records first insurance sidecar issuance worth $12m

The issuance was made through Great Wall Re Limited.

Hong Kong has recorded its first insurance-linked securities (ILS) sidecar issuance, with PICC Property & Casualty Company Limited securing $12m in protection for offshore wind farm properties in the Chinese mainland.

The issuance was made through Great Wall Re Limited and announced by the Insurance Authority (IA) on 14 October.

Clement Cheung, CEO of the IA, said the issuance demonstrated Hong Kong’s commitment to developing into a global risk management centre, supported by policy measures from the National Financial Regulatory Administration.

The IA will continue to facilitate the introduction of protected cell companies as a structure for ILS and review the definition of eligible ILS investors to support a more active trading market, Cheung said.

ILS allow insurers to transfer specific risks to capital market investors, providing an alternative source of risk-bearing capacity alongside traditional reinsurance.

Sidecars are investment vehicles that allow investors to participate in the risks and returns of a defined portfolio of insurance business.