King & Wood Mallesons (KWM) advised Peak Reinsurance Company Limited (Peak Re) as the sponsor on the issuance of the first Rule 144A catastrophe bond (144A Cat Bond) in Hong Kong. The 144A Cat Bond (issued on a private placement basis in accordance with Rule 144A of the U.S. Securities Act 1933) raised US$150 million and was issued by Black Kite Re Limited (Black Kite Re), a Hong Kong-incorporated special purpose insurer (SPI) authorised by the Insurance Authority (IA) to issue insurance-linked securities (ILS). As part of the transaction, Peak Re has entered into a retrocession arrangement with Black Kite Re, providing Peak Re with multi-year risk protection against typhoon risk in Japan.
The KWM team has been at the forefront of advising clients in the Hong Kong ILS market, acting as the Hong Kong legal advisor for the first and second SPI approvals granted by the IA since the introduction of Hong Kong’s ILS regime. For more details about the SPI approval requirements which took effect on 30 June 2021 and the first catastrophe bond issued in Hong Kong in October 2021, please refer to the articles "Rise of the Hong Kong ILS market – Insurance Authority publishes Guidelines on Application to carry on Special Purpose Business" and “KWM advises on China Reinsurance’s launch of the first in market special purpose insurer in Hong Kong”.
These successful launches of catastrophe bonds spark international interest in the future growth of Hong Kong’s ILS market. We expect that momentum to continue in the years ahead as insurers assess how to manage their risk in the Hong Kong ILS market. Our team will continue to work closely with the IA in its assessment of future SPI applications. The IA’s leadership is critical to the success of Hong Kong’s role as a leading market for the issue of ILS.
Peak Re is a prominent Hong Kong-based global reinsurance company offering property and casualty, as well as life and health reinsurance in the market.
GC Securities, a division of MMC Securities LLC, acted as the structuring agent and bookrunner. Mercer Investments (HK) Limited acted as advisors and as the co-manager as to Hong Kong investors.
KWM acted for the sponsor in respect of Hong Kong law, together with Cadwalader, Wickersham & Taft LLP as offshore deal counsel. The KWM team was led by partners Cindy Shek, Richard Mazzochi, Minny Siu and Justin Cherrington.
Any reference to "Hong Kong" or "Hong Kong SAR" shall be construed as a reference to "Hong Kong Special Administrative Region of the People's Republic of China".
