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Panda Re catastrophe bond covers China risks


Panda Re Ltd., the first catastrophe bond to cover natural disaster risks in China, has been issued by state-owned reinsurer China Property and Casualty Reinsurance Co. of Beijing.

The bond was modeled using the China Earthquake model from Risk Management Solutions Inc., the company said Thursday in a statement.

The bond will provide China Re, as it is known, with $50 million of fully collateralized reinsurance protection against losses from earthquakes in China for three years, effective July 1.

The catastrophe bond utilizes an indemnity trigger for coverage on a per-occurrence basis.

“Panda Re has been a very successful first-step into using alternative risk transfer mechanisms to strengthen and diversify our risk management strategy, and that of our risk-transfer partners,” Chen Sen, CFO and chief actuary at China Re P&C, said in the statement.

“The deal was well received by investors and priced very tightly, demonstrating the market’s strong appetite for diversifying risks,” Wen Chen, director at RMS in China, said in the statement.

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