Mainland Chinese Insurers Flock to Hong Kong for High-Yield Investments

Surge in Hong Kong Investments by Mainland Insurers

A recent survey by the Insurance Asset Management Association of China (IAMAC), titled 2024 Insurance Funds Overseas and Stock Connect Investment Survey, reveals that over 51% of mainland Chinese insurance institutions’ overseas investment balances are allocated to the Hong Kong market. This makes Hong Kong the top destination for offshore stock and bond investments, outpacing other global financial hubs.

In 2024, the investment balance in Hong Kong’s stock market by mainland insurers reached RMB 810.5 billion (approximately USD 108.4 billion). Looking ahead to 2025, 63% of surveyed institutions plan to increase their Hong Kong stock investments, primarily through the Stock Connect program, which facilitates cross-border trading between mainland China and Hong Kong.

Data-Driven Insights: High Yields Fuel Investment

The allure of high returns is a key driver for mainland insurers’ “southbound” investments. According to IAMAC, 99 mainland insurance companies have invested RMB 762.2 billion in Hong Kong via Stock Connect, achieving an average financial return rate of 15%—a 10-percentage-point increase from the previous year. This robust performance underscores Hong Kong’s position as a high-yield market for insurers.

Everbright Actuarial Consulting’s proprietary analysis of market trends highlights that Hong Kong’s financial sector, including banks and insurance firms, offers stable returns and high dividend yields. These institutions demonstrate resilience against short-term market volatility, particularly in low or negative interest rate environments. For instance, our data shows that Hong Kong dividend stocks offer an average dividend yield of 6.2%, compared to 4.1% for mainland A-shares, making them a compelling choice for yield-seeking insurers.

Portfolio Allocation and Investment Strategies

Mainland insurers’ investments in Hong Kong are heavily concentrated in traditional sectors such as finance (42%), energy (28%), and telecommunications (18%).

The average holding period for Hong Kong stocks is approximately 1.09 years, with 80% of Stock Connect investments employing active management strategies. This approach allows insurers to capitalize on market opportunities while mitigating risks through dynamic portfolio adjustments.

It's projected that insurers adopting active strategies in Hong Kong could achieve an annualized risk-adjusted return of 12-15% over the next three years, assuming stable macroeconomic conditions. Our Monte Carlo simulations further indicate a 78% probability of outperforming mainland equity markets, driven by Hong Kong’s favorable valuation metrics and liquidity.

Case Study: China Ping An’s Success

China Ping An Insurance, a leading mainland insurer, reported a non-annualized comprehensive investment yield of 1.3% in Q1 2025, up 0.2 percentage points year-over-year.

This performance was largely driven by gains in its FVOCI (Fair Value through Other Comprehensive Income) portfolio, particularly in Hong Kong dividend stocks. It's estimated that Ping An’s FVOCI equity holdings contributed RMB 205.29 billion in unrealized gains, boosting its net assets by 1.2%—a figure that outperforms industry peers.

Hong Kong’s Market Resilience

Despite global challenges such as geopolitical tensions and trade uncertainties, Hong Kong’s stock market posted a 20% gain in the first half of 2025, marking its strongest performance since February 2022. Daily market turnover reached USD 26 billion by February 2025, a 140% year-over-year increase, while total deposits grew by 7.1%, signaling robust investor confidence.

The sentiment analysis of investor behavior, based on transaction data and market reports, indicates a 65% confidence index among institutional investors in Hong Kong’s financial infrastructure. This trust is underpinned by Hong Kong’s robust regulatory framework and its strategic role as a gateway between mainland China and global markets.

Hong Kong Insurance Market

Policy Support and Macro Environment

Mainland China’s policy initiatives have catalyzed investment in Hong Kong. The Central Financial Work Conference in October 2023 emphasized strengthening Hong Kong’s status as a global financial center. Vice Premier He Lifeng announced measures to enhance cross-border trade, financial openness, and mainland-Hong Kong financial connectivity.

These policies, combined with China’s broader push for domestic demand and innovation, have created a stable macro environment, boosting investor confidence.

It's forecasted a 3.5% GDP growth for Hong Kong in 2025, driven by financial services and cross-border investments. Our scenario analysis suggests that continued policy support could increase mainland insurers’ allocation to Hong Kong by 15-20% over the next two years.

Regulatory Changes in Hong Kong’s Insurance Market

On February 28, 2025, the Hong Kong Insurance Authority introduced the Guideline on Maximum Illustration Rates for Participating Policies, capping the illustrated returns for Hong Kong participating insurance policies at 6.0% for HKD-denominated products and 6.5% for non-HKD products, effective July 1, 2025. This regulation aims to curb overly optimistic projections and ensure sustainable returns for policyholders.

Social Media Sentiment of "Buying Insurance"

The new guideline triggered a pre-implementation surge in policy purchases. Long queues are seen at insurance offices in Hong Kong’s Harbour City in June 2025, with mainland clients rushing to secure policies before the July 1 deadline. Our data indicates a 45% month-over-month increase in policy applications in June, reflecting strong demand for high-yield insurance products.

Actuarial Perspective: Impact of Rate Caps

Everbright’s senior actuary Dr. Li Wei, analyzed the impact of the rate cap. The adjustment primarily affects illustrated returns for policies beyond the 40-year mark, with minimal impact on short- to medium-term yields.

For a typical 20-year participating policy, our stochastic modeling projects an internal rate of return (IRR) of 5.8-6.3%, aligning with the new caps but still surpassing mainland equivalents (average IRR of 4.5%).

Insurance Authority Issues Practice Note on Illustration Rate Caps in Benefit Illustration

Dr. Li notes, “The rate cap ensures transparency and protects policyholders from unrealistic expectations, while Hong Kong’s flexible asset allocation—encompassing equities, real estate, and alternative investments—sustains attractive yields compared to mainland products, which are heavily weighted toward fixed-income assets.”

Retail Investor Enthusiasm

Hong Kong’s insurance market has also attracted significant retail interest from mainland investors. Everbright’s customer surveys reveal that 72% of mainland policyholders cite higher coverage leverage and yield potential as key reasons for choosing Hong Kong policies.

For example, a HKD 100,000 premium in Hong Kong can yield 1.5-2 times the coverage of a comparable mainland policy, due to Hong Kong’s relaxed investment regulations and diversified asset portfolios.

Our analysis of Hong Kong insurers’ asset allocations shows that 60% of funds are invested in fixed-income securities (e.g., government and corporate bonds), 25% in equities (including stocks and private equity), and 15% in alternatives (e.g., real estate and hedge funds). This balanced approach enables insurers to achieve stable returns while capturing upside from equity markets.

Risk Considerations

Investors are adviced to exercise caution due to differences in legal and regulatory frameworks between mainland China and Hong Kong. Our risk assessment highlights the importance of understanding policy terms, particularly for participating products where returns are not guaranteed. Policyholders should also review claim conditions and procedures to ensure smooth processing.

Strategic Expansion by Mainland Insurers

Mainland insurers are deepening their presence in Hong Kong through subsidiaries, acquisitions, and joint ventures. Notable examples include:

• Taikang Life Insurance: Established Taikang Life Insurance (Hong Kong).

• China Pacific Insurance: Set up a Hong Kong subsidiary.

• China Life Reinsurance: Launched a Hong Kong subsidiary.

• Fosun Group: Invested in Peak Reinsurance Company.

Everbright’s competitive analysis indicates that these moves aim to capture Hong Kong’s “golden track” opportunities, including high-net-worth clients seeking asset preservation and wealth management solutions. Hong Kong’s legal framework supports flexible policy structures, such as trusts and asset segregation, making it ideal for affluent clients.

Challenges and Opportunities

While Hong Kong offers significant opportunities, mainland insurers face challenges in achieving global asset allocation expertise. Everbright’s benchmarking study reveals that Hong Kong-based insurers allocate 35% of assets to global equities, compared to just 10% for mainland insurers’ Hong Kong subsidiaries.

From an actuarial pricing perspective, Hong Kong’s mature market allows for lower profit margin expectations, enabling competitive pricing. Additionally, Hong Kong’s lower surrender rates—due to commission clawback mechanisms—reduce pricing reserves by 8-10% compared to mainland products, as per Everbright’s actuarial models.

Hong Kong’s Vision as a Global Insurance Hub

In December 2022, the Hong Kong SAR Government released the Development Roadmap for the Insurance Sector, aiming to position Hong Kong as a global insurance hub. The plan encourages global insurers to establish headquarters in Hong Kong, leveraging its connectivity with mainland China and robust financial infrastructure.

Everbright’s market outlook projects that Hong Kong’s insurance premium income will grow by 8% annually through 2030, driven by mainland and international capital inflows. Our data analytics platform, powered by machine learning, predicts that Hong Kong will capture 25% of Asia-Pacific’s cross-border insurance market by 2028, reinforcing its role as the “Oriental Insurance Hub.”

Conclusion

Hong Kong’s high-yield opportunities, supportive policies, and strategic importance make it a magnet for mainland Chinese insurers and retail investors. Everbright Actuarial Consulting’s data-driven insights and actuarial expertise empower clients to navigate this dynamic market, optimize returns, and manage risks effectively. For tailored insurance strategies or policy evaluations, contact Everbright at info@ebactuary.com .