Two global insurers redomicile to Hong Kong using ‘game-changing’ new law

Two of the world’s biggest insurers and pension providers, France’s AXA and Canada’s Manulife, have both announced plans to redomicile their China region headquarters from Bermuda to Hong Kong under the new company re-domiciliation regime introduced by the Hong Kong Special Administrative Region on 23 May.

The re-domiciliation process enables companies to reregister in Hong Kong while retaining their legal identity and business continuity. Previously, they were required to undertake the complex process of winding up their operations in their existing place of registration before transferring the assets and transactions to a new Hong Kong entity.

The new re-domiciliation regime allows businesses to move to Hong Kong without having an impact on the continuity of the company’s legal entity, organisational structure, or daily operations. The existing rights and obligations of policyholders, distributors or business partners remain unaffected, and all existing agreements and commitments can continue in full force and effect.

The new law came at a time when changes to global tax laws had also made traditional offshore financial centres like Bermuda and the Cayman Islands less appealing to multinational businesses. Under the OECD’s Global Base Erosion (GloBE) rules, multinational enterprises (MNEs) with consolidated global annual revenues of more than €750 million are required to pay a minimum 15% tax on their profits in each jurisdiction in which they operate.

In addition to AXA and Manulife, a further 10 large insurers in Hong Kong are currently incorporated in Bermuda. Before the GloBE rules were implemented, companies based in Bermuda paid no corporate income tax. Another historic reason for this concentration was that, until 2006, Hong Kong imposed estate duty at rates up to 50% on assets, including funds and insurance policies, that were passed on to beneficiaries. Insurance policies sold in Hong Kong by companies domiciled outside Hong Kong were not however in scope.

AXA Hong Kong & Macau announced that, subject to regulatory approvals, it intended to re-domicile AXA China Region Insurance Company (Bermuda) Ltd (ACRIB) from Bermuda to Hong Kong under the new company re-domiciliation regime. Upon completion of the process, ACRIB will be renamed as AXA China Region Insurance Company (Hong Kong) Ltd.

“We are excited to be among the first to re-domicile to Hong Kong. This move is not merely administrative; it is a significant step forward in deepening our roots in Hong Kong and simplifying our reporting and compliance processes,” said AXA Greater China Chief Executive Officer Sally Wan.

“I firmly believe it will provide strategic advantages that position us for long-term success in one of the world’s most vibrant markets. By leveraging Hong Kong’s robust financial ecosystem and its increasing importance as a regional insurance hub and a global risk management centre, we look forward to capturing the opportunities arising from the region and achieving greater success in the future.”

Manulife (International) Ltd (MIL), the Hong Kong and Macau unit of Toronto-headquartered Manulife Financial and currently the biggest pension provider in Hong Kong, also announced in June that it plans to redomicile from Bermuda to Hong Kong in November. It said in a customer notice that its decision reflected confidence in Hong Kong as a premier international financial hub.

“Redomiciling to Hong Kong allows us to better align with the city’s robust financial and regulatory environment, strengthening our ability to meet local market needs,” said MIL chief executive Patrick Graham.

This makes Manulife (International), the Hong Kong and Macau unit of Toronto-headquartered Manulife Financial, the second insurer to incorporate in Hong Kong after a new “game changer” law easing the redomiciliation process. Rival AXA announced a similar move soon after the change.

The legislation allows companies to establish themselves in the city while retaining their legal identity and business continuity. Previously, a redomiciling company had to wind up its existing entity and shift all assets and transactions to Hong Kong.

Manulife said in a customer notice that its decision reflected confidence in Hong Kong as a premier international financial hub. The Canadian insurer already gets 44% of its earnings from Asia, with the region’s contribution projected to reach 50% by 2027.

“Redomiciling to Hong Kong allows us to better align with the city’s robust financial and regulatory environment, strengthening our ability to meet local market needs,” said Patrick Graham, CEO of Manulife Hong Kong and Macau.

Hong Kong’s insurance business is predicted to expand by a compounded 55% over the next eight years, according to industry forecasts, driven by the so-called ‘silver economy’ serving senior citizens and growth in the Greater Bay Area (GBA). Gross insurance premium is projected to reach USD127 billion by 2032 from last year’s USD82 billion.

The GBA – a cluster of 11 cities around southern China’s Guangdong province, including Hong Kong and Macau – has a combined economy of almost USD2 trillion but only 3.5% of the total population of 86 million people in the region currently has health and life insurance. According to data from the Hong Kong Insurance Authority, the sale of new life policies leapt 21.4% last year to a record USD28.34 billion, of which 28.6% were bought by mainland residents.

“I am pleased that some companies have already indicated they are actively preparing to apply for redomiciliation to Hong Kong,” said Secretary for Financial Services and the Treasury Christopher Hui Ching-yu, who led a roadshow to several Canadian cities last month.

“The ongoing uncertainties in global political and economic situations, as well as developments in international market regulations, have further highlighted Hong Kong’s advantages,” he added.

“As an international financial centre, Hong Kong has a world-class infrastructure with excellent resources to support businesses, in a strongly regulated but business-friendly environment. However, the primary advantage for businesses redomiciling to Hong Kong is to gain access to one of the world’s largest markets, China,” said Sovereign Trust (Hong Kong) Managing Director Alan Fong.

“AXA and Manulife have both made the strategic decision to redomicile to Hong Kong, so they can capture and meet the growing demand for insurance products and services from the Chinese market. However, there will also be significant positive knock-on effects for the Hong Kong economy, through the creation of jobs, the development of new skills and expertise, and the increased demand for professional services.”

Overseas companies that are interested in moving their domicile to Hong Kong will need to assess whether they meet the eligibility criteria for the new regime. They must be of company type that is the same (or substantially the same) as the four specified types of companies under Hong Kong’s Companies Ordinance (CO), and outward re-domiciliation must be permitted under the laws of their current domicile. Regulated financial institutions such as insurers must also obtain prior clearance from the Hong Kong banking or insurance regulator in advance of any re-domiciliation application.

Sovereign Trust (Hong Kong) can help with all aspects of redomiciling to Hong Kong. Upon re-domiciliation, a company will generally be required to comply with Hong Kong law in the same way as a locally incorporated company. For further information or assistance, please contact Alan Fong.