Catastrophe bonds broaden China’s risk diversification channels: China Re

The issuance of the first catastrophe bond through Hong Kong has helped to open up a new channel for risk diversification for the domestic catastrophe insurance market, according to the sponsor of the Greater Bay Re Ltd. (Series 2021-1), China Re Group.

Last week we reported that China Re had successfully secured the issuance of a $30 million catastrophe bond covering Chinese typhoon risks for its subsidiary China Re P&C, when the anticipated Greater Bay Re transaction was completed.

It’s a landmark cat bond transaction, being the first to be issued out of a new domicile, Hong Kong, while also being the first to cover a new peril from China, in typhoon risk.

FULL ORIGINAL PUBLICATION HERE

First Hong Kong cat bond, Greater Bay Re gets China Re $30m of typhoon cover

The very first catastrophe bond to be issued out of Hong Kong has now been completed, with a $30 million Greater Bay Re Ltd. (Series 2021-1) cat bond coming to market on behalf of sponsoring reinsurer China Re.

The transaction actually completed in September, but has only come to light this morning as it was relatively privately marketed by Aon we understand, with only a handful of specialist cat bond funds or investors privy to the deal.

The Greater Bay Re Ltd. cat bond was issued as a zero-coupon deal and only provides its sponsor with a single year of retro reinsurance protection we understand.

FULL ORIGINAL PUBLICATION HERE

LADWP gets $30m of wildfire cover from new Power Protective Re cat bond

California based utility the Los Angeles Department of Water and Power (LADWP) has finally secured $30 million of wildfire insurance cover from its second catastrophe bond issue, after the Power Protective Re Ltd. (Series 2021-1) deal was priced at the raised coupon level.

The eventual and successful pricing of this second Power Protective Re cat bond demonstrates that wildfire insurance, or reinsurance, capacity is available from the insurance-linked securities (ILS) market.

But the process to get to this pricing shows that this is not at any cost and ILS funds and investors are demanding higher returns for the California wildfire peril after recent losses from it.

FULL ORIGINAL PUBLICATION HERE

UNDP launches Insurance & Risk Finance Facility, ILS support anticipated

The United Nations Development Programme (UNDP) has today launched the Insurance and Risk Finance Facility (IRFF), a new initiative that aims to build financial resilience and bridge a $1.4 trillion global health, mortality, and disaster protection gap, with support from the insurance-linked securities (ILS) market expected in future.

Importantly, this Insurance and Risk Finance Facility (IRFF) will work to channel risk to private insurance, reinsurance and capital markets over-time, and aims to significantly increase the role of insurance and risk-financing in development.

The German Government has contributed €35 million in funding to the Facility, which will be used for technical work and capacity building on the ground, as well as for the development of new insurance products.

FULL ORIGINAL PUBLICATION HERE

China regulator calls on insurers to sponsor cat bonds in Hong Kong

China’s insurance regulator has called on insurers in the country to look to sponsor catastrophe bonds in Hong Kong as a way to access diversified sources of reinsurance capacity and offload peak natural catastrophe risks.

The China Banking and Insurance Regulatory Commission (CBIRC) said in a notice that domestic Chinese insurers sponsoring catastrophe bonds out of Hong Kong will be supporting its “closer” economic partnership agreement between the country and the Special Administrative Region.

As we’ve explained before, China’s government has been supportive of the development and introduction of catastrophe bond rules in Hong Kong and sees the special purpose reinsurance vehicles that can now be established there as a route for mainland Chinese insurers to access the capital markets for risk transfer and reinsurance purposes.

FULL ORIGINAL PUBLICATION HERE

Germany contributes $40.9M to risk transfer initiative

The United Nations Development Programme said Monday that the German government has contributed €35 million ($40.9 million) in funding for a new risk transfer initiative, the Insurance and Risk Finance Facility, within its Finance Sector Hub.

The goal is to co-create insurance and risk finance solutions in over 50 developing countries by 2025 and contribute to the InsuResilience Vision 2025 target of protecting 500 million poor and vulnerable people by 2025.

FULL ORIGINAL PUBLICATION HERE

Red Cross volcano cat bond issuance recognised for ESG credentials

The first parametric catastrophe bond covering pure volcanic eruption risk, which was brought to market by Replexus and Howden Capital Markets and for the Danish Red Cross has been recognised for its environmental, social and governance (ESG) credentials.

The Guernsey International Insurance Association (GIIA) has awarded its first environmental, social and governance (ESG) accreditation to an insurance entity and that entity is the Dunant Re IC Limited incorporated cell of Replexus ICC (Guernsey) Limited, the issuer of the volcano catastrophe bond earlier this year.

Operated and arranged by Cedric Edmonds, Founder and Director at Replexus ICC, while managed by Aon Insurance Managers (Guernsey), the vehicle has been recognised thanks to being the home to the first humanitarian catastrophe bond issuance.

FULL ORIGINAL PUBLICATION HERE

CEA’s risk transfer returns to $9.6bn. Short-term future needs less certain

The California Earthquake Authority (CEA) increased the size of its reinsurance and catastrophe bond risk transfer program by around 4.4% as of the end of July 2021, to reach almost $9.6 billion, but in the short-term future growth of the program seems less certain due to rising exposure and the cost of coverage.

That’s practically the same as the record size for the program, of also almost $9.6 billion of risk transfer that the CEA had in-force as of October 2020.

A relatively significant amount of catastrophe bond maturities shrank the CEA’s risk transfer and reinsurance program, back to $9.15 billion by December 2020, a figure it remained at through the end of last year.

FULL ORIGINAL PUBLICATION HERE

Zenkyoren targets $500m Nakama Re cat bond out of Singapore

Zenkyoren, the Japanese National Mutual Insurance Federation of Agricultural Cooperatives and one of the world’s largest buyers of catastrophe reinsurance protection, is back in the insurance-linked securities (ILS) market, targeting a $500 million Nakama Re Pte. Ltd. (Series 2021-1) catastrophe bond issuance to transfer more of its earthquake exposure to the capital markets.

This will be the twelfth catastrophe bond directly sponsored by Zenkyoren that we have listed in our extensive Deal Directory.

This is also set to be one of the largest cat bonds sponsored by Zenkyoren, as the mutual insurer is targeting at least $500 million of multi-year reinsurance protection across the two tranches of Japanese earthquake risk linked notes that will be issued and sold to investors.

FULL ORIGINAL PUBLICATION HERE

Weather disasters drive US $ 3.64 trillion in losses in 50 years: WMO data

The high costs of weather disasters around the globe is truly laid bare by the latest data from the World Meteorological Organization (WMO), which estimates that weather, climate and water related disasters drove some US$ 3.64 trillion in losses over the last 50 years.

The WMO’s latest Atlas of Mortality and Economic Losses from Weather, Climate and Water Extremes covers the period from 1970 to 2019, during which over 2 million lives were lost to these disasters.

That is from more than 11,000 reported disasters recorded, and during the period the research found that weather, climate and water hazards accounted for 50% of all disasters, 45% of all reported deaths and 74% of all reported economic losses, while more than 91% of these deaths occurred in developing countries.

FULL ORIGINAL PUBLICATION HERE