Core Viewpoint - The recent fluctuations in exchange rates and the U.S. government's tariff policies have raised questions about the attractiveness of Hong Kong insurance products, particularly those denominated in U.S. dollars, for mainland Chinese customers [1][2][3]. Exchange Rate Impact - The depreciation of the U.S. dollar has led to a significant appreciation of Asian currencies, including the Hong Kong dollar and offshore renminbi, which may influence the appeal of Hong Kong insurance policies [1][3]. - Despite concerns, industry insiders believe that exchange rates are not the primary factor for customers purchasing Hong Kong insurance, as many are focused on long-term investment and asset diversification [1][4]. Insurance Premiums and Sales - The Hong Kong Insurance Authority reported that new insurance premiums from mainland visitors reached HKD 628 billion, a 6.5% increase year-on-year, with a dramatic 27-fold increase in individual life insurance premiums in 2023 compared to the previous year [2][4]. - The recent appreciation of the renminbi against the U.S. dollar effectively reduces the cost of purchasing insurance for mainland residents, potentially boosting sales [4]. Yield and Investment Considerations - The yield on Hong Kong insurance policies consists of guaranteed and expected returns, with guaranteed returns being low (around 0.5%) and expected returns potentially reaching 6.5% to 7% over the long term [6][8]. - Recent increases in U.S. Treasury yields may pressure the nominal returns of dollar-denominated insurance policies, leading to concerns about investment stability and customer willingness to purchase [6][7]. Regulatory Changes - The Hong Kong Insurance Authority plans to implement new guidelines for dividend insurance products, setting a maximum illustrative rate of 6.0% for HKD products and 6.5% for non-HKD products, effective July 2025 [7][8]. - This regulatory change may lead to a decrease in expected yields, prompting customers to consider prepaying premiums to take advantage of current rates before the changes take effect [8]. Market Dynamics - The insurance market is experiencing a surge in sales due to promotional activities and the appeal of multi-currency asset allocation for customers seeking to diversify their investments [4][8]. - The long-term nature of insurance products (10 years or more) means that short-term fluctuations in exchange rates may not significantly impact customer decisions [7].