Rebound in stocks prompts shift into investment-linked insurance products

Policyholders hope to catch market rally,but AXA chief calls for long-term view

PUBLISHED : Monday, 21 January, 2013, 12:00am
UPDATED : Monday, 21 January, 2013, 5:41am

The stock market's rebound has prompted policyholders to return to investment-linked products, says AXA China Region chief executive Stuart Harrison.

Such products allow investors to allocate their premiums to different investment funds instead of traditional policies that leave it to insurers.

Harrison said sales of investment-linked products dropped in the second and third quarters of last year amid a poor stock market outlook.

According to the Office of the Commissioner of Insurance, annualised premiums of investment-linked products sold in the first nine months of last year amounted to HK$7.17 billion, down 19 per cent from the same period in 2011.

The percentage of investment-linked products that AXA sold, compared with life insurance products, in the third quarter dropped to 36 per cent from 44 per cent for the whole of 2011.

But the tide had turned, Harrison said. Sales of investment products picked up from the fourth quarter as stock markets worldwide bounced back. The rebound came after September, when governments eased monetary policies to keep their economies humming.

The Hong Kong market rose 23 per cent last year.

"Since the stock market recovery in the fourth quarter, we have seen sentiment change. More people are buying investment-linked products again," Harrison said.

This year, in keeping with further advances on the stock market, Harrison believes sales of investment-linked products would continue to grow. "It is human nature. When people see the market is up, they like to buy investment-linked products. In fact, they should buy in when the market is down. But people usually buy high and sell low."

He urged policyholders to take a long-term view. "It would be easier if they saved regularly through insurance products to take long-term benefits."

In the first nine months of last year, AXA saw its gross premiums of life insurance products rise 10 per cent year on year to HK$2.9 billion while general insurance premiums grew 13 per cent.

"Life and health policies will grow. Hong Kong people are overall underinsured, particularly those in the 30-44 age bracket. There are still growth opportunities," Harrison said.

Mainland visitors also prefer to buy insurance products in Hong Kong, which represented 28 per cent of the new life business for AXA in the first nine months of last year.

In March, AXA bought HSBC's general insurance business in Hong Kong, Singapore and Mexico, making it the largest general insurer in the city with 13 per cent market share.