“Macau’s proximity to Hong Kong, Zhuhai and other Greater Bay Area cities makes it central in every sense to Prudential’s Greater Bay Area strategy to grow its footprint in the area,” said Lawrence Lam, CEO of Prudential Hong Kong, at the launch ceremony of the Macau branch on Monday.

With Macau being home to a population of only around 680,000, most insurers have their eyes set on travellers from across the border with mainland China.

“The opening of the Macau branch will be positive news for Prudential, as it will allow the company to capture opportunities in selling policies to mainland visitors,” said Louis Tse Ming-kwong, managing director at Wealthy Securities.

“The competition will be keen though, as AIA, HSBC Life and Manulife all have large sales teams to sell policies in Macau to mainlanders.”

Chris Ma, the general manager of Prudential Hong Kong (Macau), said the insurer plans to hire 500 agents in Macau within the next five years and would also like to tie up with some banking partners to sell its products.

“Macau has a growing middle class who need life and medical insurance coverage as well as wealth management products,” Ma said. “We will also serve customers from the mainland who visit Macau.”

Prudential is only the second life insurance firm to be granted a licence by the Macau authorities in the last 20 years, following Tai Ping Life three years ago.

“The new licence shows the Macau government is keen on promoting the insurance industry in Macau,” Ma said. “The past three years of the Covid-19 pandemic has shown the importance for Macau to not rely only on the casino business but also to diversify.”

The Greater Bay Area, which connects Hong Kong, Macau and nine cities in Guangdong province, was envisioned by Beijing as an economic powerhouse.

The region’s combined gross domestic product reached nearly US$2 trillion in 2022, up 25 per cent from US$1.65 trillion in 2019, when China announced the development zone’s blueprint, Hong Kong Financial Secretary Paul Chan Mo-po said last month.

If considered as a stand-alone economy, the Greater Bay Area would have ranked as the world’s ninth-biggest economy last year, just behind Italy and ahead of Canada, South Korea, Russia and Brazil, according to data from the International Monetary Fund.

In recent years, Beijing has introduced policies to support Macau’s efforts to branch out into sectors besides gaming, traditionally a major source of income. The entry of more insurance companies into Macau will help the city pursue that goal, according to Tse.

“As Macau’s financial sector develops, it will also help promote the development of the Greater Bay Area into a stronger economic zone. People who travel to Macau no longer just gamble; they can also buy insurance products and enjoy leisure travel with their families,” Tse said.

Prudential is optimistic about the opportunities offered by Macau’s plan to diversify its economy, said Anil Wadhwani, CEO of Prudential.

“Growing demand for private medical care in Macau and the Greater Bay Area, combined with the Macau government’s proactive development of the comprehensive health industry and modern finance industry, presents a real opportunity and perfect environment for Prudential’s entry into the Macau market,” he said.

For now, Macau’s financial sector remains modest: it has two financial intermediaries, 27 life or general insurers, and 33 lenders. In contrast, Hong Kong has about 600 stock brokers, 164 insurance companies and 160 banks.

But Macau’s insurance industry has been growing rapidly. Annual gross premiums in the city’s life insurance business rose 8 per cent to 35.66 billion patacas (US$4.42 billion) in 2022, after jumping 26 per cent in 2021, according to data from the Monetary Authority of Macau.

During the five-year period from 2013 and 2019, the city’s life insurance market grew at an average 31 per cent every year, according to data from Swiss Re. However, as of 2019, the penetration rate in Macau remained low at 5.9 per cent, far behind Hong Kong’s 21.9 per cent.