Financial Institution in Hong Kong Topic: Future Development Of Insurance Industry In Hong Kong (Entering the China ’ s Insurance Service Market Sharing)

Group Zenki Yu Jackie Li Oliver Choi Carmen Law Sarah Fu

1. Abstraction  the future development of the whole insurance industry in Hong Kong  the future development of the particular insurance companies.  Manulife Company as an example  have a comprehensive understanding for the insurance industry.

2. Introduction of Insurance Industry The Conditions of Existing Insurance Industry  Prevent Suffer Loss  Diversification of Risk

2. Introduction of Insurance Industry  Transaction Cost (Asymmetric Information) Adverse Selection Moral Hazard Specific Hold-ups  Takes place after the transaction  Happens between clients and insurance companies / agents or brokers and insurance companies

3. Composition of insurance industry in Hong Kong A. The size of insurance business in Hong Kong 2002 HK$m 2003 HK$m 2004 HK$m General Business- Gross Premium 23, ,76623,478 Long Term Business-Office Premium 65, ,22598,414 Total 88, , ,89 2

3. Composition of insurance industry in Hong Kong

a. Insurer authorized in Hong Kong and they distributed by types of insurance business and countries of incorporation

3. Composition of insurance industry in Hong Kong b. The major classes of insurance business and their respective market (For general business)

3. Composition of insurance industry in Hong Kong b. The major classes of insurance business and their respective market (For long-term business)

3. Composition of insurance industry in Hong Kong

B. Manulife ’ s Financial Highlights a. Total Assets Under Management:

3. Composition of insurance industry in Hong Kong b. Total Premiums and Deposits

3. Composition of insurance industry in Hong Kong c. Benefits Paid

3. Composition of insurance industry in Hong Kong d. Policy Dividends Paid

3. Composition of insurance industry in Hong Kong e. Number of Individual Policies in Force

3. Composition of insurance industry in Hong Kong f. Number of Agents

4. Regulations of insurance industry  Financial Examination  Onsite Inspection  Market's Consolidation  Actions of Insurance Authority (IA) include: limitation of premium income, restrictions on investments, requirement for a special actuarial investigation  Self-Regulatory Initiatives

5. Operations of insurance organization A. Data Collection and Statistical Estimation  measure the optimal premium and compensation  the Central Limit Theorem  set how much is the premium  opportunity cost for the policyholder

5. Operations of insurance organization B. Contractual Consideration  asymmetric information as well as unexpected risks  fulfill the right and duty  risk being transferred, diversified or alleviated

6. Case Study of Manulife A. Introduction of Manulife Company  Manulife Life Insurance (Hong Kong) Limited  "AA+ (Very Strong) by Standard & Poor's   bancassurance alliance with CITIC Ka Wah Bank  "Guaranteed Retirement Income Plan"

6. Case Study of Manulife B. Products of Manulife  individual insurance, group life & health, wealth management, MPF & Occupational Retirement Schemes Ordinance (ORSO), general insurance, credit cards  Personal Life and Health Insurance

6. Case Study of Manulife B. Products of Manulife  life insurance is dividend into Whole Life, Term, and Endowment  In the policy, there are many information, premium paying period, basic plan premium, interest, etc.

7.Future development A. Hong Kong insurance industry  Statistics also indicated strong signs of recovery in the long term business market and general business market  According to latest figures: 178 authorized insurers 112 general business insurers 46 long term business insurers

7.Future development A. Hong Kong insurance industry  Hong Kong's insurance market has a strong international presence.  Over half of the authorized insurers are incorporated outside Hong Kong in 25 different countries. (US companies taking the lead)

7.Future development A. Hong Kong insurance industry  China's accession to the World Trade Organization opens up more opportunities for Hong Kong insurers.  China's total premium income grew to US$25 billion for 2001, an increase of 32 percent over 2000.

7.Future development A. Hong Kong insurance industry  After joining the WTO, China is committed to further widening market access to foreign players, which enables Hong Kong a bigger role to play.  Hong Kong is well poised to develop into an important insurance center

7.Future development B. Manulife Future development of Manulife  Whisked off five industry awards this year.  Came top of its class in a newly introduced MPF Fund category.

7.Future development B. Manulife Developing the china market  Continued to expand its operations in China and Hong Kong with the start of operation in cities of Nanjing, Hangzhou and Zhongshan.  Official Life Insurance Partner of the 2008 Olympic Games in Beijing

7.Future development B. Manulife Developing a Retirement Plan Services in Hong Kong  By the year 2016, more than one- third of Hong Kong ’ s population will be over fifty years old.  retirement planning should be more important  helping retiree to make a well management on saving

7.Future development B. Manulife Development on their market share  Manulife expects that there will have a well development on market price of their shares.  market price reflect the value of its business and its future business prospects  represent an attractive investment

8. Conclusion A. Hong Kong insurance industry  Helping people to prevent suffer loss and diversify their risk  Facing the problems of adverse selection, moral hazard and specific hold-ups  Reducing the risks by data collection, statistical estimation and contractual consideration

8. Conclusion  Five major classes of business  Three kinds of long term business  Self-Regulatory Initiatives  Spreading its services in China with benefiting China joined the World Trade Organization  Developing into an important insurance center

8. Conclusion B. Manulife  Operating its business in China like Nanjing, Hangzhou, Zhongshan and so on  Increasing the business of Retirement Plan Services because of serious aging problem in Hong Kong

Financial Institution in Hong Kong Goal  Insurance Service Center