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Climate Change Stimulates Cat Bond Development In Asia: Fitch

Climate Change Stimulates Cat Bond Development In Asia: Fitch

Climate Change Stimulates Cat Bond Development In Asia: Fitch

Climate Change Stimulates Cat Bond Development In Asia: Fitch

Given the surge in catastrophic occurrences brought on by climate change, analysts at Fitch Ratings believe the market for catastrophe bonds will continue to grow.

According to Fitch, with frequent capital inflows to the reinsurance sector and ISLs in Hong Kong, there is an increase in demand for bonds issued by ILS through private placement.

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Peak Re declared in June 2022 that it had successfully issued a $150 million 144A disaster bond through a recently founded special-purpose insurer, Black Kite Re, which provided funding to guard against typhoon risk in Japan.

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After the city passed its special-purpose reinsurance vehicle and ILS legislation, this was Hong Kong’s second disaster bond.

Climate Change Stimulates Cat Bond Development In Asia: Fitch

The first was issued by China Re, which sponsored the Greater Bay Re series (2021-1) catastrophe bond in September 2021, which aims to cover typhoon-related losses in the Greater Bay area and other regions in China.

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Japan-based MS&AD Insurance Group sponsored another catastrophe bond – Tomoni Re (Series 2022-1) – which secured the company $220 million of per-occurrence reinsurance protection at the top-end of price indications.

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The bond was launched to investors in March 2022 seeking a multi-year source of Japanese collateralised typhoon and flood reinsurance protection for the ultimate beneficiaries; MS&AD-owned insurance subsidiaries, Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance.

Singapore’s Catahoula II Re issued notes in June 2022 to provide catastrophe bond protection of $175 million against Louisiana-based storms and severe thunderstorms.

ALSO, READ Climate Change Events Increasing Claims Paid In Australia

In January 2022, the Philippines government recovered a $52.5 million payout under the terms of its World Bank-issued catastrophe bond, after super typhoon Rai breached the parametric trigger for wind

Climate Change Stimulates Cat Bond Development In Asia: Fitch

 

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The bond provides $150 million of tropical cyclone disaster insurance protection on a modelled loss trigger basis through a class B, not tranche, while a class A tranche provides earthquake cover.


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