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Chinese insurers sponsoring HK cat bonds get favourable capital treatment

Credit risk charges for mainland China insurance and reinsurance company sponsors of catastrophe bonds issued through Hong Kong insurance-linked securities (ILS) structures will be lower than the capital charges applied for ceding risk to reinsurance companies.

Chinese regulator, the China Banking and Insurance Regulatory Commission (CBIRC), has now included preferential treatment rules for the Hong Kong insurance industry as an core part of its Solvency Regulatory Rules II for Insurance Companies.

Preferential treatment has been in-place for a while, making it more appealing for mainland Chinese re/insurers to cede risks to Hong Kong based reinsurance entities.


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