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Asian Pacific Committee Review

Asian Pacific Committee Review. November 8, 2005 Hideki Nii Asia-pacific Committee Co-chair. 1.Asia-Pacific Committee Member ｓ. Australia Australian Financial Markets Association, Southern Hydro Japan Hitachi, Ltd. Mizuho Corporate Bank Mitsui Sumitomo Insurance Co., Ltd.

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Asian Pacific Committee Review

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  1. Asian Pacific Committee Review November 8, 2005 Hideki Nii Asia-pacific Committee Co-chair

  2. 1.Asia-Pacific Committee Memberｓ Australia Australian Financial Markets Association, Southern Hydro Japan Hitachi, Ltd. Mizuho Corporate Bank Mitsui Sumitomo Insurance Co., Ltd. Sompo Japan Insurance Inc. Sumitomo Corp. Mitsubishi Securities Tokio Marine & Nichido Fire Insurance Co., Ltd. Tokyo Electric Power Company Tokyo Gas Company, Ltd. Weathernews, Inc. New Zealand Metra Information Taiwan Central Insurance, WeatherRisk Explorer (15 members in total)

  3. 2.Committee Activity Up to now • Fifth Asia-Pacific Committee Conference in Tokyo on March 7,2005 • *Sixth one will skip next year and be held in the year after next • Joint Committee Meeting with ISDA in Japan • Providing information among members • (Collaboration with JMA) • Public relations • Invitation to Membership From now (Planning) • Regional Market Survey • Spreading Weather Derivatives to Asia Pacific countries • Expanding coverage products from pure weather to • weather related products • - Commodity, • - Emission, • - Energy, etc.

  4. 3.-1Japanese Market (1)Market Size in 2003(Estimate) ・No. of Deals done …Approx. 2,100 (approx.150% of the previous year) ・Aggregate Maximum Payouts …Approx. US $420 mil. (US $0.2mil per transaction) ・Major Players…Mitsui Sumitomo Ins., Other Non-Life Insurance Companies, Mizuho-Corporate Bank, Other Major commercial Banks Regional Banks (as intermediary), and Trading Companies Note:We suppose Japanese Market in 2004 expanded by around from 20% to 30%.

  5. 3.-2Japanese Market • (2)Market Characteristics • Major commercial banks and non-life insurance companies aggressively distribute weather derivative products to their customers as a risk management tool through their networks. Especially, non-life insurance companies tie up with lots of regional banks as an intermediary and have great achievements in distribution of standardized products . • A number of standardized products with small payouts and premiums are transacted with small and medium-sized companies across a wide range of industries. • ・ In utility sector, many companies utilize weather derivative products with large payouts related to a temperature risk as a tool hedging weather risk .

  6. 4.Market Topics outside Japan The details to be left to New Market Panel tomorrow morning (1)Taiwan Weather derivative products are approved by a competent authority and a kind of weather-index insurance has already been launched. (2)Korea Weather derivative products have not yet officially been approved, but a competent authority has been considering allowing insurance companies to launch weather-index insurance. (3)India A permission from a competent authority for launching weather derivative products has been sought . Weather-index insurance has already been launched.

  7. Thank You (Co-Chair Persons) Hideki Nii; Mitsui Sumitomo Insurance Michiaki Kouno; Mizuho Corporate Bank

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