Hong Kong’s insurance premiums return to pre-pandemic levels: Jefferies

HSBC and Hang Seng have shown unexpected growth in 2024.

Jefferies Equity Research saw notable growth in sales for HSBC and Hang Seng, whilst AIA and Prudential maintained stable performance.

Data from Hong Kong's daily immigration tracker indicates a surge in arrivals starting in late June, peaking in August, and then normalising sharply in September.

A similar pattern occurred last year, suggesting this could be an emerging post-pandemic seasonal trend. Whilst the latest tourism data extends only to July, it mirrors the same trend. 

With markets typically reacting to new tourism data rather than immigration data, Jefferies expects the release of August data to be met with optimism, whilst September figures may disappoint. 

In terms of life insurance sales, this data aligns with Prudential's first half (H1 2024) report, which noted increased sales momentum in June. A positive surprise in Q3 sales is possible, though the momentum may not carry into Q4.

Whilst policy volumes remain weak, case sizes have stabilised at high levels. Premiums, both onshore and offshore, are back to pre-pandemic and pre-civil disturbance levels, though with more quarterly volatility. Agency sales are stable, and growth is driven by bancassurance through banks. 

Offshore sales volumes, however, are only half of their 2018 levels, with the shortfall offset by larger case sizes. 

Despite fluctuations, case sizes have stabilised in 2024, supporting steady premium volumes at pre-pandemic levels. A significant recovery in volumes will be necessary to reach new premium highs.

HSBC and Hang Seng have shown unexpected growth in 2024. Hang Seng, in particular, has become the leader in onshore business, holding a 23% market share in 2Q 2024 compared to 10% in FY 2023.

HSBC now ranks second in both onshore (15%) and offshore (18%) markets, a substantial increase from its 9% share of in-force premiums in FY 2023. This growth, driven by bancassurance, has expanded the market rather than taking share from competitors, with AIA and Prudential maintaining strong sales in absolute terms.