Tuesday, July 31, 2018

Reinsurers in Hong Kong to have privilege of lower credit risk charge

KUALA LUMPUR, July 31 (Bernama) -- Qualified reinsurers in Hong Kong will receive preferential treatment from China Regulator based on a recent agreement between China Banking and Insurance Regulatory Commission and the Insurance Authority of Hong Kong.

The privilege will allow the mainland insurance companies that cede business to qualified Hong Kong reinsurers to be subject to a lower reinsurance credit risk charge, according to a new briefing from A.M.Best -- a global rating agency and information provider focus on the insurance industry.

The agreement is expected to boost Hong Kong´s standing as a risk management hub in Asia providing reinsurance capacity and expertise as it able to attract new capital to Hong Kong for those interested in tapping into the Chinese reinsurance market.

It also encourages Mainland China insurers to give priority to high-quality Hong Kong reinsurers over other offshore reinsurers in placing reinsurance, a statement said.

Previously, Hong Kong reinsurers were grouped with other offshore reinsurers and assigned baseline risk charge factors for credit risk exposure that were much higher than those applicable to onshore reinsurers.

A.M. Best expects the agreement to enhance Hong Kong reinsurers´ competitiveness in China and promote Hong Kong as a risk management platform for Chinese cedents, particularly in support of the country´s Belt and Road Initiative. More information at www.ambest.com.

--BERNAMA

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