Hong Kong insurers' shares slump on report China to tax offshore insurance income

Hong Kong-listed shares of major insurers, led by Prudential (2378) and AIA Group (1299), fell sharply on Thursday after Caixin reported China's mainland tax authorities are levying taxes on insurance policy income earned offshore.

Beijing and Hangzhou authorities have started to apply personal income tax rates of 20 percent on returns from Hong Kong insurance policies, including dividend payouts and interest earned on prepaid premiums, Caixin reported on Wednesday.

The move was seen by analysts as a potential sharpening of China's increased scrutiny of offshore investments.

China's finance ministry and the National Financial Regulatory Administration have not responded to Reuters' requests for comment.

AIA shares slid 8.2 percent, Prudential fell more than 5 percent, and Hong Kong-based insurer FWD Group (1828) was down 4.5 percent, dragging Hong Kong's Hang Seng Index more than 2 percent lower in early trading on Thursday.

Hong Kong insurance has long been a channel for Chinese investors buying assets abroad, with the policies providing more protection than what is available on the mainland, and related savings and investment products mostly denominated in dollars. A drop in domestic bond yields dragged down onshore insurance returns, which further fuelled demand for offshore products in recent years.

Chinese insurers Ping An Insurance (2318) and China Life Insurance (2628) were down more than 1 percent as both firms have a sizable offshore business with Hong Kong assets.

HSBC's Hong Kong-listed shares (0005) fell 2.2 percent and Standard Chartered (2888) was down 1 percent. Both have large insurance units.

The overseas-based insurers earn a major share of their business from mainland Chinese customers, and the tax news sparked fears sales of insurance policies and ​other financial products could slow.

Hong Kong was Prudential's largest profit contributor in 2025. In its annual results in March, it attributed its ‌12 percent growth ⁠in new business profit in the financial hub to sales growth across both domestic customers and visitors from mainland China. 

Prudential's London-listed shares fell by as much as 13 percent on Wednesday.

Reuters

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