Hong Kong’s insurance sector is experiencing a significant recovery, with premiums returning to pre-pandemic levels, as highlighted in a recent report by Jefferies Equity Research. The report indicates notable sales growth for HSBC and Hang Seng, while AIA and Prudential have maintained stable performance.
Recent data from Hong Kong’s daily immigration tracker reveals a substantial increase in arrivals, which began in late June, peaked in August, and then sharply normalized in September. This trend mirrors a similar pattern observed last year, suggesting it may be an emerging seasonal characteristic in the post-pandemic landscape. Although the latest tourism data is available only through July, it supports this same trend.
Jefferies anticipates that markets will respond positively to the forthcoming August tourism data, despite potential disappointment in September figures, as investors typically react more to tourism statistics than immigration data.
In the realm of life insurance sales, the data aligns with Prudential’s first half (H1 2024) report, which noted a surge in sales momentum during June. A positive surprise in third-quarter sales is possible, although the momentum may not carry over into the fourth quarter.
While policy volumes continue to be weak, case sizes have stabilized at elevated levels. Premiums—both onshore and offshore—have rebounded to pre-pandemic and pre-civil disturbance figures, albeit with increased quarterly volatility. Agency sales remain stable, with growth primarily driven by bancassurance partnerships with banks.
However, offshore sales volumes are only at half of their 2018 levels, a gap that has been offset by larger case sizes. Despite fluctuations, the stabilization of case sizes in 2024 supports steady premium volumes at pre-pandemic levels. A substantial recovery in volumes will be required to achieve new premium highs.
HSBC and Hang Seng’s unexpected growth in 2024 is noteworthy. Hang Seng has emerged as the leader in the onshore market, boasting a 23% market share in the second quarter of 2024, up from just 10% in fiscal year 2023. Meanwhile, HSBC ranks second in both onshore (15%) and offshore (18%) markets, a significant increase from its 9% share of in-force premiums in fiscal year 2023. This growth, largely driven by bancassurance, has expanded the market rather than cannibalizing shares from competitors, with AIA and Prudential continuing to achieve strong sales in absolute terms.
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