Mainland visitor volumes plateau as Hong Kong life insurance steadies

Tourism volume tempers optimism for a large rebound in cross-border life insurance.

Stable Mainland Chinese Visitor (MCV) volumes to Hong Kong are constraining growth prospects for cross-border life insurance sales, according to Jefferies Equity Research.

Despite expectations for a return to pre-civil disturbance immigration volumes from the first half of 2019, recent daily immigration data indicates a plateau at levels comparable to the latter half of 2019, during the civil unrest. 

Monthly tourism figures corroborate this trend, showing a recovery only to pre-pandemic levels, not pre-disturbance highs.

This underwhelming recovery tempers optimism for a significant rebound in cross-border life insurance sales to MCVs, despite macroeconomic conditions in China that might otherwise support increased capital outflows.

Industry data shows that both onshore and offshore new business and in-force premiums have returned to pre-pandemic levels, albeit with higher volatility. 

Distribution trends indicate agency-led growth in the fourth quarter of 2024 (Q4 2024), with bank channels losing momentum after a strong start to the year.

New policy volumes in the onshore market are stable, whilst average case sizes remain elevated. In the offshore market, case sizes are significantly above pre-pandemic levels, reflecting increased household deposits. 

However, new policy volumes remain constrained, tracking with immigration and tourism trends. 

Jefferies expects average case sizes to remain flat in real terms, suggesting that future growth will depend on increased policy volumes—making daily immigration figures a critical leading indicator.

On the competitive front, HSBC and Hang Seng gained onshore market share in early 2024, whilst AIA and Prudential rebounded late in the year. 

Offshore, Manulife has emerged as the leading player in new premium volume for the second consecutive quarter, surpassing both Prudential and AIA. 

Previously a minor player in the offshore segment, Manulife expanded its presence during 2021 to 2022 and saw sustained volume growth in 2023 and 2024. 

AIA and Prudential posted modest gains in Q4 2024 but failed to overtake Manulife.