Hong Kong celebrates the issuance of a catastrophe bond by the World Bank and its listing on HKEX
28 March 2023
The Government and the Insurance Authority (IA) today (28 March 2023) welcomed the issuance of insurance-linked securities (ILS) in the form of a catastrophe bond by the World Bank (International Bank for Reconstruction and Development) in Hong Kong with a size of US$350 million (equivalent to about HK$2.75 billion), offering protection against losses related to earthquake risks in Chile over the next three years.
“Hong Kong is driven towards development into a leading international risk management centre. This is the fourth issuance, as well as the inaugural listing, of ILS in Hong Kong. It bears testament to Hong Kong’s position as an international financial centre and the vibrant development of the Hong Kong insurance industry. Against the backdrop of a rising trend of catastrophic events caused by climate change, the HKSAR Government is committed to supporting the Hong Kong insurance sector in offering a greater variety of comprehensive products and solutions to assist our country and global market players for better management of relevant risks,” said Mr Paul Chan, Financial Secretary.
To mark the inaugural ILS listing, a gong-strike ceremony was held at Hong Kong Exchanges and Clearing Limited (HKEX) with the presence of representatives from the World Bank, the HKSAR Government and the IA.
Encouraged by the multilateral collaborative efforts that achieved through cross-agency partnerships both local and international, and built upon support of the Central People’s Government for Hong Kong as a catastrophe bond issuing platform, Mr Christopher Hui, Secretary for Financial Services and the Treasury, said at the ceremony, “As set out in the Development Roadmap for the Insurance Sector in Hong Kong published by the Government in December last year, we endeavour to be a facilitator in the national ‘Dual Circulation’ strategy through enhancing connectivity with the Mainland and international markets. Leveraging the dedicated regulatory regime and Pilot Grant Scheme rolled out early in 2021, we hope to attract more issuing institutions and talents for building up a vibrant ILS ecosystem in Hong Kong. Today's issuance and listing exactly demonstrate Hong Kong's unique bridging role.”
“The decision by a prominent international body like the World Bank to partner with Hong Kong marks an important milestone in our journey of striving to become a vibrant ILS hub, while enhancing public awareness on how alternative risk transfer tools could supplement underwriting capacity to increase financial inclusiveness and close protection gaps,” said Mr Stephen Yiu, Chairman of the IA.
“This Chile Catastrophe Bond is an example of how countries are putting in place financial safety nets to mitigate the potentially disruptive economic impacts of earthquakes,” said Mr Jorge Familiar, Vice President and Treasurer of the World Bank. “We are pleased to partner with the Hong Kong Insurance Authority and the Hong Kong Stock Exchange in their efforts to evolve the insurance linked securities market, which strengthens the resilience of World Bank members to natural disasters.”
This is already the fourth ILS issued in Hong Kong after the bespoke regulatory regime and the pilot grant scheme were introduced in 2021. Please refer to the press release of the World Bank for further details.
Ends
A gong-strike ceremony was held at HKEX to mark the inaugural ILS listing with the presence of officiating guests (from left to right): Ms Katherine Ng, Head of Listing of HKEX; Mr Jorge Familiar, Vice President and Treasurer of the World Bank; Mr Christopher Hui, Secretary for Financial Services and the Treasury; Mr Clement Cheung, Chief Executive Officer of the IA; and Ms Glenda So, Group Head of Emerging Business and FIC of HKEX.
Mr Jorge Familiar, Vice President and Treasurer of the World Bank
Mr Christopher Hui, Secretary for Financial Services and the Treasury
Mr Clement Cheung, Chief Executive Officer of the IA, delivers a speech at the listing ceremony.