Hong Kong gets first ILS sidecar
The Hong Kong Financial Services & the Treasury Bureau has welcomed the territory’s first ILS “sidecar”, set up by the Chinese insurer PICC Property & Casualty Company (PICC P&C) in Hong Kong.
The $12 million sidecar offers quota share reinsurance coverage for offshore wind farm property insurance ventures located in the Chinese Mainland.
Hui further noted that this launch signifies notable advancements for Hong Kong’s insurance sector and capital markets in risk transfer and alternative capital utilization under national support.
The financial services leader highlighted that Hong Kong’s initial Five-Year Plan aims to maximize Hong Kong’s competitive advantage in international insurance, reinsurance, and capital markets.
A key initiative in Hong Kong’s strategy to emerge as a premier insurance and alternative risk center in Asia involves the introduction of regulations permitting Protected Cell Captives (PCCs).
The Hong Kong Insurance Authority (HKIA) says that its regime could reduce the cost and complexity of establishing captives and issuing insurance-linked securities (ILS).
The move towards PCCs has partly been made in response to Singapore’s consultation in July on its own PCC framework, which is targeted for implementation by 2028.
PCCs allow multiple ring-fenced “cells” to operate within a single legal entity, which can mean faster and cheaper structures for ILS sponsors and captive owners.
