Insurance Asia (November 2023)

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INSURANCE RANKING

Life insurers take the lead in latest Hong Kong Business Insurance Rankings Some life insurers saw their assets surge by as much as 44%.

AIA International is the top insurer for the Hong Kong Business' 2023 Insurance Rankings

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ong Kong’s insurance industry is undergoing a significant shift as the Hong Kong Business Insurance Rankings reveal a trend towards more life insurers joining the list of the top 50 insurers. This shift can be attributed to the opportunity in the Mainland China insurance market. According to a report by GlobalData, despite the decline in demand from Mainland visitors in 2021 due to travel restrictions, a significant proportion of whole life insurance premiums came from Chinese visitors who purchased their policies from Hong Kong prior to the pandemic due to favourable terms and greater flexibility offered to them as compared to policies sold in China. For the most recent rankings, a total of 30 life insurers made it onto the top 50 list, higher compared to 20 general insurers. This is different from the previous rankings when the top 50 list had an equal number of life and general insurers. The Hong Kong Business Insurance Rankings is an annual list of the top 50 insurers in Hong Kong. It is based on data from the Insurance Authority’s statistics, with the most recent rankings using data from 2021 and comparing them to the 2020 data.

26 INSURANCE ASIA

The goal for 2023 and beyond should be to better optimise the benefits of technology investments

Billy Wong

Cecilia Chang

The rankings revealed that the total assets of the top 50 insurers surged by 1.13% reaching $717b in 2021 compared to $706b in 2020. This is comparatively lower than the 9.75% increase last year, however, the increase in 2021 is due to a lower base caused by lockdowns during the early days of the COVID-19 pandemic. Holding the number one spot is AIA International, which saw its 2021 assets climb by 2.38% to $129b compared to $126b in 2020. Manulife (Intl) leapt from fourth to claim the second spot as its assets surged by 44.44% to $91b in 2021 compared to $63b in 2020. Prudential (HK) Life, meanwhile fell to the third rank after its 2021 assets declined to $87b from $92b in 2020. China Life also went down one place as its assets decreased to $62b from $67b. HSBC Life retained its spot at number five but saw its assets climb to $56b from $54b. Out of all general insurers, BOC Group Insurance saw the biggest asset increase to $18b in 2021 from $4b in 2020. It also saw its rank rise from 23rd to 12th for this year’s rankings. Meanwhile, the list also saw newcomers to the top 50, with AIA Everest leading the way at $6b, ranking 16th amongst the top 50.

Inflation and consumer cutbacks Inflation continues to pose challenges for both insurers and consumers. For life and retirement insurers, this means increasing rates which can reduce reinvestment risk and make rate guarantees more cost-effective from an economic perspective, according to Billy Wong, Insurance Leader at PwC Hong Kong. However, too sharp a rise in rates could introduce disintermediation risk, negatively impacting balance sheets. To mitigate this risk, insurers may need to frequently reset rate guarantees and pricing to respond to market pressure on book value guarantees. Higher interest rates may also make certain product types less appealing to consumers, Wong warned. A report by YouGov found that 14% of Asia Pacific consumers would cut back on insurance first when household budgets are tight. In Hong Kong, 16% said they would reduce spending on insurance. Higher interest rates coupled with fluctuating equity markets may also make certain product types less attractive. Wong advised insurers to consider rebalancing portfolios, possibly moving back to more traditional investments and relying less on alternative asset classes. Return of MCVs The opening of borders in 2022 also saw the return of Mainland Chinese Visitors (MCVs). Most Hong Kong insurers rely on MCVs for the purchase of life insurance policies. In the latest survey by the Insurance Authority, 81% of Hong Kong’s visitors from January to September 2022 were comprised of MCVs, leading to a 150% increase in new business premiums in H1 2022. “Overall, GlobalData estimates Life GWP to grow by 4.5% in 2022. With Greater Bay Area (GBA) initiatives gaining momentum, higher M&A activity was seen in 2022. Insurers view GBA as a gateway to Hong Kong and China and will


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