The first catastrophe bond has been issued under Singapore’s insurance-linked securities (ILS) regulatory regime.
The bond provides IAG with AUD 75 million of annual aggregate catastrophe protection for three years and is part of its aggregate sideways cover, which in total provides protection of AUD 475 million excess of AUD 375 million.
The bond is sponsored by Insurance Australia Group (IAG), while GC Securities, a division of Marsh and McLennan Companies, acted as the sole structuring and placement agent.
The issuance follows the introduction of an ILS grant scheme by the Monetary Authority of Singapore (MAS) in February 2018, which funds upfront ILS bond issuance cost.
The scheme was developed in consultation with industry experts and is designed to catalyse the development of Singapore’s ILS market.
Ng Yao Loong, assistant managing director, development and international group, MAS, described the issuance as a “significant milestone in the development of Singapore’s ILS market”.
He expanded: “It demonstrates the growing capabilities of the Singapore financial sector in delivering such innovative capital market solutions.”
“The (re)insurance industry, multilateral organisations and sovereigns are now able to tap additional risk transfer mechanisms to better address Asia’s disaster protection needs.”
Guy Carpenter vice chairman David Priebe added: “Singapore’s ILS grant scheme is an
excellent initiative that has played an important part in enabling this transaction to take place.”
“We hope the pioneering work of IAG, MAS, and GC Securities provides a springboard for greater use of ILS to close the protection gap in Asia and promote sustainable economic
development in one of the most dynamic regions of the world.”
