China Re issues $50m cat bond

China Re has become the first Chinese company to issue a catastrophe bond on the international market.

According to Xinhau News Agency, the official press agency of the People's Republic of China, the bond was issued on July 1, 2015, through Panda Re, a Bermuda-based special purpose vehicle.

China Re raised $50 million to cover risks incurred from earthquakes in China.

The sponsor of the bond is China Property & Casualty Reinsurance Co, a wholly-owned subsidiary of China Re, the country's only state-owned reinsurer.

"China made the first step toward linking domestic insurance risks to the international capital market," said Li Peiyu, chairman of China Re.

Part of the earthquake insurance underwritten by China Re and its subsidiary was ceded to Panda Re, which then sought financing for the coverage on the bond market.

“The issuance marked the country's "breakthrough" in securing insurance risks, paving the way for a diversified risk-sharing mechanism for catastrophe insurance by making use of the capital market, China Re said in a statement,” said the news agency.