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The following is issued on behalf of the Financial Services Development Council:
The Financial Services Development Council (FSDC) today (December 16) released a report titled "Developing Hong Kong as an Offshore Renminbi (RMB)-denominated Reinsurance Centre", which seeks to provide initiatives to reinvigorate the local reinsurance industry and position Hong Kong as the leading offshore RMB reinsurance centre.
The report notes that there is a huge potential market to be tapped, which is estimated to write about an additional RMB22 billion of reinsurance business from insurers in the Greater China region. Further developing RMB reinsurance services in Hong Kong will also help Mainland insurers to diversify their exposure and offer them better access to a wider range of international reinsurance providers and specialist carriers currently based overseas. Moreover, the industry believes that the promotion of offshore RMB reinsurance could reinforce Hong Kong's position as an offshore RMB business centre and the gateway to China.
The Chairman of the FSDC, Mrs Laura Cha, said, "Hong Kong should act quickly to secure the first-mover advantage to become the leading offshore RMB reinsurance centre. This would complete Hong Kong's offshore RMB service offerings, strengthen our position as the premier offshore RMB business centre, and further contribute to the internationalisation of RMB."
Currently, the limited RMB investment possibilities for offshore reinsurers and Mainland insurers' practice to cede offshore reinsurance in US dollars are some of the major hurdles to fostering growth in RMB reinsurance business in Hong Kong.
The report recommends providing Hong Kong-based reinsurers specific and recyclable RMB Qualified Foreign Institutional Investors (RQFII) bond quota for tapping into the Mainland investment market, especially when exclusive access for Hong Kong-based reinsurers to the Mainland's onshore bond market through the RQFII channel would be a unique value proposition that could differentiate Hong Kong from other offshore centres.
In addition, encouraging Hong Kong-based reinsurers and brokers to write/transact RMB reinsurance and conducting promotional campaigns targeting overseas reinsurers and large financial corporations would be other key measures to develop the RMB reinsurance business in Hong Kong. The report further points out that creating a competitive tax regime for all types of reinsurance written in Hong Kong, though not a necessary condition, could also help attract international reinsurers to establish a presence and conduct business in the city.
The report can be downloaded from the FSDC website: www.fsdc.org.hk.
About the FSDC
The Hong Kong Special Administrative Region Government established the FSDC in 2013 as a high-level, cross-sectoral advisory body to engage the industry in formulating proposals to promote the further development of Hong Kong's financial services industry and to map out the strategic direction for development.
The FSDC set up five committees, namely the Policy Research Committee; the Mainland Opportunities Committee; the New Business Committee; the Market Development Committee and the Human Capital Committee.
Ends/Tuesday, December 16, 2014
Issued at HKT 16:00
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