This week in insurance: HKIA introduces caps, MS&AD merges two subsidiaries, Prudential names new regional CEO

Taiwan’s life insurance sector is set to remain volatile in 2025 due to shifting surplus components.

Asia-Pacific's insurance sector from 31 March to 4 April saw some significant developments, including a regulatory update in Hong Kong affecting policy illustration rates and a key leadership reshuffle at Prudential, which appointed a new regional CEO for several Southeast Asian markets.

The Hong Kong Insurance Authority (HKIA) has introduced caps on illustration rates for participating insurance policies, setting limits of 6% for Hong Kong dollar-denominated policies and 6.5% for non-Hong Kong dollar-denominated policies.

The new rules take effect on 1 July. Following the announcement, misunderstandings have circulated on social media, with some claims incorrectly stating that the cap limits actual policy returns. The HKIA clarified that the caps apply only to the internal rate of return used in benefit illustrations at the point of sale and do not restrict insurers from paying dividends above these rates.

In Myanmar, Howden Re released a statement following the earthquake along the Sagaing Fault in Myanmar, one of the region’s most active fault systems. Andy Souter, head of Asia Pacific at Howden Re, described the event as a major human tragedy and noted a significant protection gap, underscoring the need for more insurance capital in emerging markets.

The fault, stretching over 1,200 km, has experienced multiple major earthquakes, including M7.3+ events in 1931 and 1946. Studies suggest a seismic gap in the area, indicating potential for a M7.9 earthquake near today’s rupture site.

Meanwhile, Taiwan’s life insurance industry is expected to remain volatile in 2025 due to shifting components of operating surpluses, according to a report by Taiwan Ratings Corp. (TRC), a subsidiary of S&P Global Ratings. Interest surplus remains the primary driver of profitability, followed by mortality and loading surpluses.

In India, Hong Kong-based Peak Reinsurance Company Limited (Peak Re) has received a reinsurance branch license from the International Financial Services Centres Authority (IFSCA) to operate as an IFSC Insurance Office (IIO).

On the corporate front, Generali has completed the acquisition of full ownership of Generali China Insurance Company Limited (GCI) after securing all regulatory approvals.

MS&AD Insurance Group Holdings said it plans to merge its two core non-life insurance subsidiaries, Mitsui Sumitomo Insurance Co., Ltd. and Aioi Nissay Dowa Insurance Co., Ltd., with the merger scheduled for April 2027. The decision was made at a Board of Directors meeting on 28 March.  

The merger aims to strengthen MS&AD’s domestic non-life insurance business and support the group's vision of becoming a world-leading insurance and financial entity.

In terms of leadership changes, Aon plc has named Soeren Soltysiak as its new Asia CEO of Reinsurance Solutions, effective 1 April 2025.

Prudential plc has appointed John Cai as Regional CEO for Malaysia, Indonesia, Vietnam, and Agency, effective 7 April. He will be based in Hong Kong and report to Prudential CEO Anil Wadhwani.