There is an insurance-linked securities (ILS) rivalry developing between Singapore and Hong Kong, with both domiciles offering incentives to encourage companies to develop the structures, according to Jose Ribeiro, managing director, Asia Pacific, A.M. Best.
Speaking on A.M. Best TV, Ribeiro explained the rivalry between the two domiciles was due to Singapore being seen as the centre for insurance and reinsurance in Asia, while Hong Kong was seen as the centre for banking and financial services, and for insurance connected with China.
However, Ribeiro suggested that Hong Kong is shifting its focus under new CEO Carrie Lam.
He said: “Carrie Lam has been very outspoken in terms of supporting the development of the insurance industry and they will now offer ILS incentives, as well as Singapore.”
The Monetary Authority of Singapore (MAS) established an ILS grant scheme at the beginning of 2018, aimed at catalysing the development of the domicile’s ILS market by offering to cover the upfront set up costs involved in issuing ILS bonds.
Ribeiro said this “very interesting incentive” had been producing results for Singapore.
“Entities are already going through the process. There is nothing real yet but we have been told that there are companies in the pipeline looking to launch their own ILS structures in Singapore.”
Similar incentives are being offered by Hong Kong, and Ribeiro noted that this had meant the market had started to develop.
He stated: “We are seeing some movement, especially from Chinese entities who want to issue CAT bonds and some fully collateralised vehicles to offer Chinese clients.”
“We are seeing movement in both Singapore and Hong Kong, but there is nothing concrete yet … it will happen hopefully within the next 12 months.”
He added: “We are seeing both Singapore and Hong Kong trying to establish themselves as centres for ILS vehicles.”
