Canadian insurer Manulife (International) wants to redomicile its Hong Kong unit in the city from Bermuda as it has big plans for expansion in the Greater Bay Area, according to its Hong Kong and Macau CEO, Patrick Graham.
Manulife, which started its business in Hong Kong 126 years ago, is the city’s second-largest life insurer and largest pension provider. It also uses the city as its Asian headquarters, overseeing 13 markets with about 13 million customers in the region.
The insurer and Hong Kong’s other 11 large insurance firms – such as AIA, AXA and HSBC Life – are, however, currently incorporated in Bermuda because of an estate duty Hong Kong levied at the time they were set up, which was later scrapped.
Manulife has been working with other firms and the Hong Kong government on reforms that will allow such insurers to come back to the city and incorporate here.
“Manulife has been a driver behind this agenda,” Graham said in an interview. “It is a quirk of history that we all started in Bermuda. But the good news is, the government [of Hong Kong] and the industry are all lined up to make it happen, to create a pathway for us to redomicile here.”
The government is collecting views until next month on allowing overseas firms to change their place of incorporation to Hong Kong without them needing to wind up or get court approval first. The Hong Kong Federation of Insurers, an Industry body, fully supports this and hopes insurers will be the first firms to benefit from this mechanism.
A spokeswoman of the Financial Services and the Treasury Bureau said the proposed new rules will be generally applicable to companies coming from different places and of different types.
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High hopes for China’s Greater Bay Area, but integrating 11 cities will pose challenges
High hopes for China’s Greater Bay Area, but integrating 11 cities will pose challenges
“We started in March 2023 a two-month public consultation and have been engaging major stakeholders, including the insurance sector, business chambers, professional bodies and relevant advisory bodies,” she said. “We have in parallel started formulating the detailed legislative proposal, taking into account the views collected and mapping out other preparatory work for the implementation of the regime.”
Having more international insurers incorporated in Hong Kong would fulfil a goal set by Chief Executive John Lee Ka-chiu, who in December said he wanted the city to become an international insurance centre.
“Hong Kong has a right to win in this space,” Graham said. “The city is positioned in the Greater Bay Area. The fact is that 13 of the world’s top 20 insurers are already calling this place home in some form [or the other].”
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Manulife will continue its business operations in Bermuda, but wants to have its Hong Kong and Macau businesses redomiciled in Hong Kong to show its commitment to the region, Graham said, as the local unit has plans to expand in the Greater Bay Area development zone.
“The Greater Bay Area makes up around 6 per cent of China’s population, but 11 per cent of the country’s GDP,” he said. “Outside Hong Kong, the insurance penetration is close to 6 per cent in this region, which is less than one-third of the penetration in Hong Kong. It is just such a phenomenal opportunity.”
Graham, who is of British origin and has been in the city for 12 years with his family, said he strongly believes that “Hong Kong is back” after three years of the coronavirus pandemic.
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Before joining Manulife in January, he was the CEO for Asia-Pacific at medical insurer Cigna. Graham said his strategy was simple – he wanted to hire more talent to achieve growth in sales. He plans to hire 3,000 more agents this year to boost the sales team to close to 15,000 personnel, and increase 15 per cent of the insurer’s supporting staff.
“There is a huge pent-up demand among mainland Chinese customers visiting Hong Kong, and within the Greater Bay Area,” Graham said.
The insurer and its peers have reported strong growth in sales in the first two months of the year, after the border between Hong Kong and mainland China reopened in January. Mainland customers made up four-fifths of the city’s 2.4 million visitors last month, according to the Hong Kong Tourism Board.
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Manulife will invest HK$24 million (US$3 million) to set up a second prestige centre located at the Gateway in tourist hotspot Tsim Sha Tsui in July, after setting up the first one two years ago. The two centres – one for its agents to meet clients and the other for its banking and broker partners – will have a total area of 14,043 sq ft to cater to high-net-worth individuals and mainland visitors.
“We are seeing customer demand,” Graham said. “Customers are telling us they want … a physical face-to-face setting and at a premium location.”
The insurer is optimistic about growth, both in Hong Kong and in its mainland visitors business, driven by the border reopening and the macro demands in health and protection, Graham said.
“We remain bullish on the outlook for the rest of the year.”
