
NFRA issues guidance encouraging mainland insurers to sponsor collateralised sidecar vehicles out of Hong Kong’s ILS framework
China’s insurance markets regulator, the National Financial Regulatory Administration (NFRA), has issued new guidance prompting domestic insurers and reinsurers to establish collateralised “sidecar” structures in Hong Kong.
The move is aimed at deepening access by Chinese re-/insurers to international capital via Hong Kong’s insurance-linked securities (ILS) ecosystem and enhancing risk-transfer capacity for disaster and large-loss exposures.
The NFRA’s Notice on the Issuance of Insurance-Linked Securities on the Hong Kong market (October 2025) outlines steps to encourage quota-share vehicles and special-purpose insurers that can issue equity or debt-type securities to investors, funding reinsurance obligations of Chinese cedants.
These vehicles would sit alongside catastrophe bonds already issued by mainland sponsors such as Taiping Reinsurance Company (“Silk Road Re”, US$35 million, Dec 2024) and PICC Property and Casualty Company Limited (“Great Wall Re”, US$32.5 million, 2022).
According to the NFRA, the initiative supports three objectives: enriching channels for risk diversification, improving domestic insurance-market resilience and enhancing Hong Kong’s status as an international financial centre.
The regulator stated that solvency treatment of sidecar structures would align with reinsurance-counterparty risk measures, and listed management requirements referencing its existing cat-bond ILS framework.
Industry observers view the launch of sidecar guidance as the next evolutionary step in China’s ILS journey—providing Chinese insurers with a more flexible tool than excess-of-loss catastrophe bonds and enabling quota-share and retrocession business to tap global capital markets via Hong Kong.
One data point noted by the community: outstanding collateralised reinsurance sidecar structures globally have surpassed US$17 billion as of mid-2025, showing investor appetite for this format.
The development comes amid broader liberalisation of the Chinese insurance-financial sector.
Earlier this year the NFRA removed the requirement for Hong Kong and Macau financial institutions to have at least US$2 billion in assets before investing in mainland insurers (effective March 2025).
That reform is seen as complementary to the sidecar initiative, signalling Beijing’s intent to deepen cross-border risk-and-capital linkages in insurance markets.
While details of future sidecar transactions remain emergent, the guidance positions Hong Kong as a growing ILS hub and offers Chinese cedants an avenue to alleviate rising catastrophe-exposure pressures.
The success of the initiative will depend on regulatory clarity, investor take-up and the ability of Chinese insurers to adopt quota-share models with sufficient transparency and capital-market depth.
The move is aimed at deepening access by Chinese re-/insurers to international capital via Hong Kong’s insurance-linked securities (ILS) ecosystem and enhancing risk-transfer capacity for disaster and large-loss exposures.
The NFRA’s Notice on the Issuance of Insurance-Linked Securities on the Hong Kong market (October 2025) outlines steps to encourage quota-share vehicles and special-purpose insurers that can issue equity or debt-type securities to investors, funding reinsurance obligations of Chinese cedants.
These vehicles would sit alongside catastrophe bonds already issued by mainland sponsors such as Taiping Reinsurance Company (“Silk Road Re”, US$35 million, Dec 2024) and PICC Property and Casualty Company Limited (“Great Wall Re”, US$32.5 million, 2022).
According to the NFRA, the initiative supports three objectives: enriching channels for risk diversification, improving domestic insurance-market resilience and enhancing Hong Kong’s status as an international financial centre.
The regulator stated that solvency treatment of sidecar structures would align with reinsurance-counterparty risk measures, and listed management requirements referencing its existing cat-bond ILS framework.
Industry observers view the launch of sidecar guidance as the next evolutionary step in China’s ILS journey—providing Chinese insurers with a more flexible tool than excess-of-loss catastrophe bonds and enabling quota-share and retrocession business to tap global capital markets via Hong Kong.
One data point noted by the community: outstanding collateralised reinsurance sidecar structures globally have surpassed US$17 billion as of mid-2025, showing investor appetite for this format.
The development comes amid broader liberalisation of the Chinese insurance-financial sector.
Earlier this year the NFRA removed the requirement for Hong Kong and Macau financial institutions to have at least US$2 billion in assets before investing in mainland insurers (effective March 2025).
That reform is seen as complementary to the sidecar initiative, signalling Beijing’s intent to deepen cross-border risk-and-capital linkages in insurance markets.
While details of future sidecar transactions remain emergent, the guidance positions Hong Kong as a growing ILS hub and offers Chinese cedants an avenue to alleviate rising catastrophe-exposure pressures.
The success of the initiative will depend on regulatory clarity, investor take-up and the ability of Chinese insurers to adopt quota-share models with sufficient transparency and capital-market depth.







































