Chinese financial markets regulator the National Financial Regulatory Administration (NFRA) has issued guidance for domestic China market insurance and reinsurance companies to sponsor collateralised sidecar structures out of Hong Kong.
Continuing to recognise the potential benefits to the domestic China insurance market of accessing third-party investor sources of international capital to fund growing reinsurance needs, Chinese regulators and lawmakers seem to be accelerating their push to connect Chinese re/insurers with the capital markets via Hong Kong.
We first wrote about high-level Chinese government officials exploring the potential for insurance risks to be securitized and transferred to international investors back in 2011, since when the topic has repeatedly come up in government discussions on the need for more capacity to support growing natural catastrophe exposures in the country.
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