Long Term Insurance
Business
Long term insurance industry
gained 16.0% in 2006, compared with that of
16.6% in 2005. Total office premiums in-force
increased from $114,756 million to $133,087
million, equivalent to about 9.0% of the gross
domestic product. The growth was mainly attributable
to the increase in Individual Life business.
Overview
Individual Life business remained the dominant
line of business, with office premiums in-force
of $114,912 million or 86.3% of the market
total, rising 17.0% from 2005. The corresponding
number of Individual Life policies stood at
7.1 million, carrying net liabilities of $380,020
million that grew by 29.7%.
Yearly contributions for Retirement Scheme
contracts administered by insurers added 12.0%
to $14,635 million. At the end of 2006, there
were 67,860 Retirement Scheme contracts carrying
net liabilities of $124,233 million.
In-force office premiums of Group Life business
moved up by 8.8% to $1,305 million, while the
corresponding number of policies and net liabilities
increased by 2.6% to 15,651 and 13.3% to $597
million respectively.
In-force office premiums of Annuity and other
businesses (comprising mainly Permanent Health
business) moderated by 3.0% to $2,235 million,
accounting only for 1.7% of the total in respect
of long term insurance business.
Office premiums of new Individual Life business
office premiums gained 15.8% to reach $52,510
million, and the corresponding number of new
policies edged up 0.2% from 1,012,488 in 2005
to 1,014,332 in 2006.
Figure 3.1 Long Term Insurance
Business
(Graphic: Figure
3.1 Long Term Insurance Business)
Individual Life In-Force Business
Total office premiums for Non-Linked business,
which gained 5.0% from that of 2005 and accounted
for 61.1% of the total office premiums of Individual
Life in-force business, amounted to $70,226
million. As at the end of 2006, the number
of in-force policies stood at 6,072,450, up
5.1% from that of 2005. The total sums assured
and net liabilities also increased by 4.2%
and 23.3% to $2,207,716 million and $253,942
million respectively. Among these Non-Linked
policies, Whole Life and Endowment insurance
accounted 79.9% of the total Non-Linked office
premiums in-force, while Term and Other insurance
took up the remaining 20.1%. Non-Linked business
had been classified into with-profits business
and without-profits business. Under this classification,
with-profits business took up 81.2% of the
office premiums in-force, while without-profits
business accounted for the remaining 18.8%.
Total office premiums for Linked business,
which represented 38.9% of the total office
premiums of Individual Life in-force business,
grew by 42.7% to reach $44,687 million. The
corresponding number of policies and net liabilities
also rose by 27.3% to 1,028,698 and 45.0% to
$126,078 million respectively.
Figure 3.2 Individual Life
In-Force Business
(Graphic: Figure 3.2 Individual Life In-Force
Business - Office Premiums)
(Graphic: Figure 3.2 Individual life In-Force
Business - Office Premiums of Non-Linked
Business)
Individual Life New Business
Office premiums of Individual Life new business
achieved a growth of 15.8% over 2005 to reach
$52,510 million in 2006, although the number
of new Individual Life policies expanded mildly
by 0.2% from 1,012,488 in 2005 to 1,014,332
in 2006. This showed a general increase of
average premiums per policy. Linked business
became the dominant line of new business, with
office premiums represented 60.8% of the total
office premiums of Individual Life new business.
The remaining 39.2% was attributable to Non-Linked
business.
Contrary to Linked business, the number of
policies of Non-Linked business decreased by
8.6% to 730,201, with office premiums decreased
by 13.9% to $20,566 million. Compared with
regular premium business, single premium business
registered deeper decline both in number of
policies and office premiums. As regards product
categories, Whole Life and Endowment insurance
business remained the dominant types of Non-Linked
business, taking up 75.9% of total premiums
for Non-Linked new business, whereas Term and
Other insurance accounted for the balance of
24.1%. Non-Linked business had been classified
into with-profits and without-profits business. The
former took up 86.2% of new office premiums
while the latter represented the remaining
13.8%.
New Linked business in 2006 registered a
growth of 48.8% in office premiums with the
corresponding number of policies increased
by 33.1%. The number of policies and office
premiums of new Linked business in single payment
mode grew by 34.1% and 48.9% respectively.
New Linked business in regular payment mode
also increased by 32.8% and 48.5% in terms
of number of policies and office premiums respectively.
New Business Index, defined as total office
premiums for all regular premium products plus
one-tenth of single premiums, rose by 14.1%
in 2006. The increase in New Business Index
was the combined result of new premiums recorded
for regular premium business and single premium
business, which rose by 13.5% and 16.8% respectively.
During the year, the New Business Index for
Non-Linked business decreased by 5.6% whereas
the New Business Index for Linked business
increased by 48.6%.
Figure 3.3 Individual Life
New Business
(Graphic: Figure 3.3 Individual life New
Business - Office Premiums)
(Graphic: Figure 3.3 Individual life New
Business - Office Premiums of Non-Linked
Business)
Figure 3.4 Individual Life
New Business (Number of Policies and New Business
Index)
(Graphic: Figure
3.4 Individual Life New Business (Number
of Policies and New Business Index))
Individual Life Voluntary Termination
Rate (Lapses and Surrenders)
Voluntary termination rate is the ratio of
the number of policies lapsed or surrendered
during the year to the average number of policies
in-force and is a measure of the persistency
of business.
For Non-Linked Individual Life business,
the overall voluntary termination rate decreased
to 6.6% in 2006. The rates for the two main
types of insurance, i.e. Whole Life and Endowment
businesses, were 5.3% and 3.1% respectively.
For Linked Individual Life business, the
overall voluntary termination rate also decreased
to 6.2% in 2006. Among others, the voluntary
termination rate for Whole Life business was
6.9% and that for Endowment business was 4.1%.
Figure 3.5 Individual Life
Voluntary Termination Rate
(Graphic: Figure 3.5 Individual Life Voluntary
Termination Rate - Non-Linked Business)
(Graphic: Figure 3.5 Individual Life Voluntary
Termination Rate - Linked Business)
Group Life Business
Group Life business comprises Class A business
(non-employer group business) and Class I business
(employer group business).
Class A business accounted for 15.4% of the
Group Life office premiums. At the end of 2006,
there were 1,171 Class A policies in-force,
covering 383,775 lives and offering a total
of $81,623 million in form of insurance protection
(i.e. total sums assured). Office premiums
and net liabilities for Class A policies were
$201 million and $179 million respectively.
Class I business made up the remaining portion,
i.e. 84.6%, of the Group Life office premiums.
At the end of 2006, the number of Class I policies
in-force was 14,480, covering 769,687 lives.
Total sums assured, office premiums and net
liabilities for this type of policies were
$379,983 million, $1,104 million and $418 million
respectively.
Figure 3.6 Group Life In-Force
Business
(Graphic: Figure 3.6 Group Life In-Force
Business - Number of Policies)
(Graphic: Figure 3.6 Group Life In-Force
Business - Office Premiums)
Retirement Scheme Business
Retirement Scheme business consists of Class
G business which provides for a guaranteed
capital or return and Class H business which
does not provide for such a guarantee.
At the end of 2006, Class G contributions
amounted to $7,436 million, representing 50.8%
of overall contributions for Retirement Scheme
business. Net liabilities amounted to $69,898
million, representing 56.3% of total net liabilities.
Net liabilities had been classified into unit
and non-unit liabilities. Unit liabilities
took up 75.7% of the total net liabilities,
or $52,880 million, while non-unit liabilities
took up the remaining 24.3% or $17,018 million.
Class H business accounted for the remaining
49.2% of overall contributions and 43.7% of
total net liabilities for Retirement Scheme
business. Unit liabilities accounted for 75.1%
of net liabilities or $40,791 million while
non-unit liabilities accounted for the remaining
24.9% or $13,545 million.
Figure 3.7 Retirement Scheme
In-Force Business
(Graphic: Figure 3.7 Retirement Scheme
In-Force Business - Contributions)
(Graphic: Figure 3.7 Retirement Scheme
In-Force Business - Net Liabilities)
Annuity and Other Business
Annuity in-force business decreased in terms
of number of policies and office premiums by
1.2% and 14.5% respectively whereas net liabilities
increased by 18.9% to $4,322 million. During
the year, a total of 5,282 new Annuity policies
were sold, bringing office premiums of $235
million.
Other business comprises Permanent Health,
Tontines and Capital Redemption business. During
the year, Permanent Health business decreased
by 2.6% in terms of number of policies to 208,348.
Its office premiums and net liabilities grew
by 10.2% to $1,178 million and 5.0% to $2,026
million respectively. As regards Tontines and
Capital Redemption businesses, they represented
total office premiums of about $0.1 million.
Market Analysis
At the end of 2006, there were 65 authorised
long term insurers. Excluding Lloyd's and 6
pure reinsurers, 4 insurers reported office
premiums in-force of over $10 billion. They
took up 49.3%, in aggregate, of the long term
insurance market. 21 insurers' office premiums
were each in the region of $1 billion to $10
billion, covering 46.7% in aggregate of the
total figure. 8 insurers reported office premiums
in the region of $100 million to $1 billion,
accounting for, in aggregate, a market share
of 3.7%. 25 insurers with office premiums of
less than $100 million represented the remaining
0.3% of the total market.
Figure 3.8 Grouping of Long
Term Business Insurers According to the Level
of Office Premiums of In-Force Business in
2006
(Graphic: Figure 3.8 Grouping of Long
Term Business Insurers According to the Level
of Office Premiums of In-Force Business in
2006)
Figure 3.9 Top 10
Long Term Business Insurers by Office Premiums
of In-Force Business in 2006
| Ranking |
Name
of Insurers |
Abbreviated
Name |
Office
Premiums |
Market
Share |
| |
|
|
$m |
% |
| 1. |
American
International Assurance Company (Bermuda)
Limited |
AIA
(Bermuda) |
21,517 |
16.2 |
| 2. |
Manulife
(International) Limited |
Manulife
(Int'l) |
17,263 |
13.0 |
| 3. |
HSBC
Life (International) Limited |
HSBC
Life |
14,717 |
11.1 |
| 4. |
Prudential
Assurance Company Limited - The |
Prudential
(UK) |
12,014 |
9.0 |
| 5. |
AXA
China Region Insurance Company (Bermuda)
Limited |
AXA
China (Bermuda) |
8,252 |
6.2 |
| 6. |
Hang
Seng Life Limited |
Hang
Seng Life |
7,734 |
5.8 |
| 7. |
BOC
Group Life Assurance Company Limited |
BOC
Group Life |
6,216 |
4.7 |
| 8. |
Sun
Life Hong Kong Limited |
Sun
Life Hong Kong |
4,838 |
3.6 |
| 9. |
AXA
Wealth Management (HK) Limited |
AXA
Wealth Mgt (HK) |
3,663 |
2.8 |
| 10. |
Zurich
International Life Limited |
Zurich
International |
3,192
 |
2.4
|
| |
Sub-total |
|
99,406 |
74.8 |
| |
Others
(remaining insurers) |
|
33,681
|
25.2
|
| |
Market
Total |
|
133,087 |
100.0 |
In terms of market concentration of in-force
business, the top 10 long term business insurers
in 2006 underwrote an aggregate of 74.8% of
the total business, compared to that of 72.5%
in 2005.
Figure 3.10 Market Share of
Long Term Business Insurers by Office Premiums
of In-Force Business in 2006
(Graphic: Figure 3.10 Market Share of
Long Term Business Insurers by Office Premiums
of In-Force Business in 2006)
In terms of Individual Life new business,
of the total 37 insurers underwriting such
business in 2006, 15 insurers reported new
office premiums exceeding $1 billion. These
insurers accounted for a market share of 87.8%
of total business. 15 insurers, with new office
premiums in the range between $100 million
and $1 billion, accounted for 12.0% in aggregate
of the total market. The remaining 7 insurers,
with new office premiums less than $100 million,
represented 0.2% of the total figure.
Figure 3.11 Grouping of
Long Term Business Insurers According to the
Level of Office Premiums of Individual Life
New Business in 2006
(Graphic: Figure 3.11 Grouping of Long
Term Business Insurers According to the Level
of Office Premiums of Individual Life New
Business in 2006)
Market Performance for the First
Three Quarters of 2007
For the first three quarters of 2007, the
provisional statistics showed that total revenue
premiums of long term in-force business amounted
to $122,989 million, representing an increase
of 26.0% over the same period in 2006.
Revenue premiums of Individual Life and Annuity
(Non-Linked) business and Individual Life and
Annuity (Linked) business grew by 8.2% to $54,309
million and 59.4% to $49,963 million respectively.
Contributions of Retirement Scheme business
also recorded a growth by 17.5% to $16,558
million. On the benefit side, total insurance
benefits paid to individuals increased by 30.8%
to $41,898 million.
Statistics for the first three quarters of 2007
showed that new office premiums (excluding Retirement
Scheme business) of long term business increased
by 41.7% to $54,408 million compared with the
same period in 2006. Although Individual Life
and Annuity (Non-Linked) business decreased by
4.7% to $14,317 million in terms of new office
premiums, individual Life and Annuity (Linked)
business leaped by 72.0% to $39,756 million.