ExclusiveUCF Capital buys Hong Kong Life as Chinese funds rush into city’s insurers

UCF Capital Ltd., a financial group based in Hong Kong and Beijing, is among the consortium of buyers behind the HK$7.1 billion (US$910 million) purchase of Hong Kong Life, the city’s 10th largest life insurer, according to two sources familiar with the deal.

The Chinese company, whose businesses include financial technology, online wealth management, payments, health care and real estate, plans to combine its fintech expertise with Hong Kong Life’s insurance business, the sources told the South China Morning Post, declining to be named. The buyer intends to maintain the existing management of Hong Kong Life, they said.

UCF is the latest example of mainland Chinese capital that’s flooding into Hong Kong in search of land parcels, insurers and prime real estate as hedges for the renminbi’s 7 per cent deterioration against the US dollar.

Mainland Chinese individuals have also been pouring money into Hong Kong’s insurance policies, spending HK$48.9 billion during the first nine months of 2016, more than double the same period a year earlier. Up to 37 per cent of all insurance policies sold in Hong Kong were to mainland Chinese policy holders, up from 21.7 per cent in 2015.

The rush by mainland capital into Hong Kong’s insurance policies and insurance companies “has bolstered the total sales of insurance products in the city,” said Chan Kin-por, the lawmaker for the industry. This has benefited many Hong Kong insurance companies and attracted many new investors to the Hong Kong market.”

The flood of funds by ordinary Chinese policy holders have made insurers ripe for picking by mainland asset traders and corporate acquirers. There were eight takeovers of Hong Kong insurers last year by overseas and Chinese companies in 2016, up from six in 2015 and three in 2014, according to Thomson Reuters’ data.