Hong Kong insurers stay stronger under new reporting standard, HKRBC

Insurers applying for transitional measures are likely to recalibrate their operations.

Hong Kong insurers are expected to maintain resilient capital positions under the Hong Kong Financial Reporting Standard 17 (HKFRS17) and the Hong Kong Risk-Based Capital (HKRBC) regime by adjusting their product portfolios and refining investment strategies, Fitch Ratings said.

HKFRS17 took effect in January 2023, whilst the HKRBC regime was implemented in July 2024. 

Both frameworks introduce an economic basis for measuring assets and liabilities, influencing insurers’ business mix, capital strategies, and investment management.

The Hong Kong Insurance Authority has granted insurers a transition period of up to three years, ending 30 June 2027, to fully implement HKRBC. 

Fitch noted that insurers applying for transitional measures are likely to recalibrate their operations to ease capital pressures brought by the higher capital requirements.

Fitch expects insurers in Hong Kong to sustain robust capital positions and maintain relatively low financial leverage under the HKRBC framework. 

Many insurers benefit from the backing of international insurance groups or banking parent companies, which allows for the adoption of more advanced capital management approaches. 

These include ongoing adjustments to investment strategies, asset-liability management, and product design.