In Hong Kong, many insurance companies have a long historical background, among which the strength and reputation of established insurance companies are an important embodiment of their core competitiveness.
After years of baptism, these companies have not only accumulated profound industry experience, but also established a solid reputation and credibility in the market, becoming the cornerstone of customer trust.
This has also enabled Hong Kong insurance companies to perform well in terms of credit rating, solvency, product design, and fulfillment ratio of dividend income as a whole.
Solvency is a key indicator of an insurance company's financial stability, which refers to its ability to repay its debts.
According to the definition of the Office of the Commissioner of Insurance of the HKSAR Government, an "insurance company" must ensure that its assets exceed its liabilities and that it is maintained at a level not lower than the level of solvency reserves required by law.
Another term often mentioned with "solvency" is the "solvency adequacy ratio," which refers to the ratio of a company's total available capital to the minimum regulatory capital.
We often hear people say that the solvency of one insurance company is 200% and the other is 300%, and this figure is actually the "solvency adequacy ratio".
On March 8, the Hong Kong Insurance Authority released provisional statistics for the Hong Kong insurance industry in 2023, with the gross and net premiums of Hong Kong's general insurance business being HK$67.3 billion (up 4.1% year-on-year) and HK$43.3 billion (up 2.7%) respectively, with gross claims paid at HK$32.1 billion and overall underwriting profit falling from HK$4.2 billion to HK$800 million.
The overall underwriting profit of direct business decreased by 95.4% year-on-year to HK$100 million, and the net claims incurred ratio increased from 58.1% to 64.1%.
Solvency adequacy ratio = real capital ÷ minimum capital requirement.
From the above formula, it can be seen that the larger the total available capital of an insurance company, the higher its solvency adequacy ratio, and the more stable the company's financial strength.
The purpose of this article is to sort out and present an overview of the latest solvency data released by major insurance companies in Hong Kong. Through the interpretation of this article, you will have a clearer understanding of the solvency performance of each insurance company, and provide strong support for your insurance decisions.
Tomokuni
Prudential
Fortis
Vantone
FWD
Axa
Hongli
Yongming-hsien
It should be noted that not all Hong Kong insurers use the same system to calculate solvency adequacy ratios. For example, AIA, FTIS, Vantone, FWD, etc., currently use Hong Kong's relatively simplified solvency adequacy ratio calculation.
AXA, on the other hand, uses the Solvency II regulatory system adopted by EU insurance companies, which is more complex and complete. Solvency II not only stipulates the supervision of individual companies, but also the supervision of insurance groups, which greatly expands the scope of supervision of the liquidation capital requirements of the insurance industry.
In addition, Manulife and Sun Life are regulated by the Canada Financial Institutions Regulation (OSFI). Similar to our CBRC, OSFI will conduct a risk assessment of the safety and soundness of the insurance company to ensure that the insurance company has sufficient capital and capacity to ensure future operations.
Hong Kong's insurance market ranks first in the world in terms of insurance penetration rate and insurance density in Asia, with 13 of the world's top 20 insurers authorized to operate insurance business in Hong Kong.
Hong Kong insurance has always attracted many mainland customers with its unique advantages. However, many people still have many questions about Hong Kong insurance or Hong Kong insurance companies, especially in terms of solvency.
According to the requirements of the Hong Kong Insurance Authority, the solvency of a Hong Kong insurance company cannot be less than 150%. However, the reality is that the solvency of most Hong Kong insurers is above 300%, and some even exceed 600%, indicating that these companies are in a very strong financial position.
So some friends may ask: is the higher the solvency, the better? Not necessarily, if solvency is too high, it may mean:
1. A lot of money is idle in insurance companies, which reflects the low investment efficiency of insurance companies;
2. Insurance companies have low sales volume and low minimum capital requirements.
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