Hong Kong's first "sidecar" insurance-linked securities issuance, with a total amount of US$12 million.

PICC Property and Casualty has issued Hong Kong's first sidecar insurance-linked securities, with a total issuance amount of US$12 million, equivalent to approximately HK$94 million, providing proportional reinsurance coverage for mainland offshore wind power insurance business. Secretary for Financial Services and the Treasury Christopher Hui said he welcomes PICC P&C's issuance of the sidecar in Hong Kong, reflecting the city's comprehensive advantages in reinsurance and capital markets. He noted that this marks important progress, with national support, in Hong Kong's insurance industry and capital markets in risk transfer and alternative capital deployment, enhancing the market's capacity to address catastrophic and other specialised risks. He also said the government will study amending legislation to introduce protected cell companies to further reduce the cost of issuing insurance-linked securities and attract more companies of different scales to choose Hong Kong as a location for managing group or regional risks. Since 2021, a dedicated regulatory regime for insurance-linked securities has been established, and a grant pilot programme launched, which has so far facilitated the issuance of 7 catastrophe bonds and 1 sidecar in Hong Kong, with a total issuance amount of approximately HK$6.3 billion. The Insurance Authority also welcomes PICC P&C's issuance of Hong Kong's first sidecar insurance-linked securities. Insurance Authority Chief Executive Clement Cheung noted that the authority will continue to promote the introduction of protected cell companies as an issuance structure for insurance-linked securities and review the existing definition of qualifying insurance-linked securities investors to make the trading market more vibrant. A sidecar is an insurance-linked securities structure through which investors provide capital to a specific insurance or reinsurance portfolio. Generally, sidecars are funded through equity or debt instruments, such as preference shares or notes, sharing premiums, claims and underwriting performance of a particular insurance or reinsurance portfolio with the sponsor on a proportional basis.