Peak Re sells second catastrophe bond in boost for Hong Kong market
The latest sale is the seventh since the market launch in 2021, expanding the pool of catastrophe bonds to US$800 million
Peak Reinsurance (Peak Re) sold its second catastrophe bonds in three years to help deepen Hong Kong’s capital market for securities that offer protection against damages caused by natural disasters globally.
The Hong Kong-based insurer raised US$50 million from the sale of 8 per cent 2028 notes through its special-purpose entity Black Kite Re to cover earthquakes and typhoon risks in Japan, China and India, it said in a statement on Tuesday. Black Kite earlier sold US$150 million of so-called Cat bonds in June 2022 to insure against typhoon risks in Japan.
Cat bonds are insurance-linked securities used by insurers to transfer extreme risks to bond investors. The latest sale lifted the total amount raised by companies and supranational agencies to US$800 million since Hong Kong’s government unveiled its regulatory regime and incentives in 2021.
“This transaction underscores our ability to pioneer innovative risk transfer solutions for the Asia-Pacific region,” said Franz-Josef Hahn, CEO of the Hong Kong reinsurer founded in 2012. “By combining developed markets like Japan with emerging markets such as India and China, we have created a unique diversifier that strengthens resilience for our clients and their communities.”
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The sale offers a timely reminder for the industry, given the inadequate protection in recent years. For example, only 10 per cent of the losses caused by extreme weather events in mainland China were insured, compared with a global average of 40 per cent, the National Financial Regulatory Administration said last year.