The first captive insurer formed by a multinational enterprise based in Hong Kong has received authorisation from the Insurance Authority (IA).
According to a statement by HSBC, Wayfoong (Asia), a wholly owned subsidiary of the HSBC Group will reinsure employee-benefit risks for HSBC’s 26,000 employees in Hong Kong, as well other Asia-Pacific markets.
IA CEO Clement Cheung said, “This decision taken by the HSBC Group reflects our growing attractiveness and promising potential as a key captive domicile, leveraging the unique advantages of Hong Kong to facilitate multinational enterprises in managing their global operations.”
Hong Kong Financial Services and Treasury secretary Christopher Hui said, “The Government has been working tirelessly with the insurance industry to boost diversified development through various measures, including a 50% tax concession for local captive insurers.
“Given the current global situation where risks take on new dimensions, we will continuously revisit our policy tools with a view to attracting more multinational enterprises from various regions and of multiple scales to choose Hong Kong as the base of their captive insurers.”
A captive insurer primarily helps the parent organisation to cope with the variety of perils that a large business corporations with a wide geographical footprint has to confront with. Captives enable the parent organisation to nurture internal capacity and optimise resource deployment.
Hong Kong is home to a large number of indigenous multinational enterprises and a natural domicile for captive insurers affiliated with state-owned and private corporations from the Mainland. Hong Kong is now the domicile of five captives. The first four local captive insurers are established by Mainland corporations in petroleum, nuclear energy and electricity generation. They primarily underwrite risks associated with property damage and goods in transit.