Hong Kong’s life insurers could still see annual premium growth of 8 to 10 per cent over the next two years, despite a recent regulatory shift stemming from Beijing’s overseas taxation rules, according to S&P Global Ratings.
Resilient demand for overseas diversification should prevent a lasting downturn, the credit rating agency said, another vote of confidence in the city’s thriving insurance and wealth management industries.
“We expect a temporary slowdown in sales to mainland customers,” S&P stated in a new report, adding that it did not expect a sustained decline in business despite potential near-term volatility amid mainland China clients reassessing their offshore investment choices.
“Underlying demand for multi-currency asset diversification, offshore wealth management, and healthcare and protection remain[s] intact,” the agency said.
Interest-rate differentials, multicurrency assets, healthcare needs and protection gaps among Hong Kong’s ageing population should continue to underpin the sector, the agency added in its report published on Tuesday.
Beijing’s taxation bureau said last week that the recent scrutiny stemmed from an existing tax rule rather than a new policy. But market anxiety grew as local tax authorities stepped up enforcement, while cross-border information sharing under the Common Reporting Standard made offshore assets increasingly visible.
S&P’s base-case projection of 8 to 10 per cent growth still represents a fall compared with a 33.7 per cent jump in premiums last year. Visitors from mainland China have historically generated about 30 per cent of new business in the sector, making them a crucial source of growth.