Hong Kong insurers' capital positions to be resilient despite regulatory changes

Written by Adam Cadle

23/05/2025

Hong Kong insurers are likely to maintain resilient capital positions under the HKFRS17 accounting rules and Hong Kong risk-based capital (HKRBC) regime by reshaping their product portfolios and optimising investment strategies, Fitch Ratings has said.

Insurers are also likely to adopt more sophisticated approaches for capital management.

HKFRS17 was implemented in January 2023 and HKRBC in July 2024. The new standards, which measure assets and liabilities on an economic basis, have influenced insurers' business mixes, investment management and capital strategies.

The Hong Kong Insurance Authority (HKIA) gives insurers a transition period of up to three years to 30 June 2027 to implement the HKRBC, which imposes higher capital requirements and new accounting rules.

"We believe insurers that applied for transitional measures will recalibrate their operating approaches to reduce the capital burden," Fitch Ratings stated.

"We believe that Hong Kong insurers largely maintain robust capital positions and relatively low financial leverage under the HKRBC framework. Many insurers are backed by international insurance conglomerates or banking parent companies, enabling them to adopt more sophisticated capital management strategies. They are proactively fine-tuning investment strategies, asset-liability management and product offerings."

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