Citi Research recaptured in its report that the Independent Commission Against Corruption (ICAC) and the Insurance Authority (IA) had earlier mounted a joint operation and arrested a broker and a referrer suspected of selling unlicensed insurance to Mainland China Visitors (MCVs). The referrer was suspected of selling a large number of insurance policies to clients without a license and receiving high referral fees from the broker.

Citi Research considered that the joint operation would not affect the MCV business of the Hong Kong insurance sector. Despite the slackening sales growth in the broker channel, the impact on the value of new business (VoNB) should be very limited due to the lower margins in the broker channel. Meanwhile, aggressive broker channel distribution also jeopardized the revamp of agency post COVID, as brokers usually receive commissions at 2x of that for agents.

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In terms of annualized premium equivalent (APE), AIA (01299.HK)  +1.300 (+1.979%)    Short selling $584.08M; Ratio 29.603%   / PRU (02378.HK)  -0.150 (-0.167%)    Short selling $179.88K; Ratio 2.547%   's broker channel accounted for 23%/ 14% of their Hong Kong business in FY2023, while FTLife/ Sun Life (SLF.US)      / FWD will account for 82%/ 65%/ 47%.

Citi Research believed that the improved distribution channels and reduced competition among agents in the long run will be positive news for top agency-focused Hong Kong insurers.
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