AIA Group (1299) said its Hong Kong business remains strong in July and August, even after the required cap of up to 6.5 percent on illustration rates took effect last month.
Hong Kong’s Insurance Authority announced in February that a cap on rates in the benefit illustrations for participating policies – at 6 percent for Hong Kong dollar-denominated and at 6.5 percent for non-Hong Kong dollar-denominated policies – would come into effect on July 1.
Though the watchdog emphasized that the ceilings are not for real returns, a number of investors still misunderstood that the participating policies could not have actual returns higher than 6.5 percent from July, leading to a rush of new policy sales.
Thanks to this, AIA’s business from mainland Chinese visitors and in the Hong Kong market recorded strong growth in the first half, regional chief executive and group chief distribution officer Jacky Chan Wing-shing said at a press conference.
The momentum continued in July and August, he said.
Chan added that AIA will compete with its rivals through innovative products and that its investment strategies have not changed despite the rate cap requirement.
AIA chief investment office Mark Konyn noted that Hong Kong’s commercial property market is going through a tough time and the company’s fixed-income portfolio involves exposure to the sector. But Konyn stressed that the relevant bonds AIA held are of very high quality.
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