Hong Kong-listed shares of major insurers, led by Prudential and AIA Group, fell sharply on Thursday after Caixin reported that national authorities are levying taxes on insurance policy income earned outside the mainland.

Beijing and Hangzhou authorities have started to apply personal income tax rates of 20 percent on returns from Hong Kong insurance policies, including dividend payouts and interest earned on prepaid premiums, Caixin reported on Wednesday.

The move was seen by analysts as a potential sharpening of increased scrutiny of non-mainland investments.

That saw share plunges of HK$6.35, or 8.17 percent, to HK$71.40 for AIA Group, HK$6.40, or 5.63 percent, to HK$107.30 for Prudential and HK$1.88, or 5.97 percent, to HK$29.60 for FWD Group, dragging the Hang Seng Index more than two percent lower in early trading on Thursday.

Hong Kong insurance has long been a channel for Chinese investors buying assets outside the mainland, with the policies providing more protection than what is available domestically, and related savings and investment products mostly denominated in dollars.

A drop in domestic bond yields dragged down onshore insurance returns, which further fuelled demand for offshore products in recent years.

Ping An Insurance and China Life Insurance were down more than one percent as both firms have a sizeable offshore business with Hong Kong assets.

HSBC's Hong Kong-listed shares fell more than 2.2 percent and Standard Chartered was down more than 1.5 percent.

Both have large insurance units.

Such insurers earn a major share of their business from mainland customers, and the tax news sparked fears sales of insurance policies and other financial products could slow.

Hong Kong was Prudential's largest profit contributor in 2025.

In its annual results in March, it attributed its 12 percent growth in new business profit in the financial hub to sales growth across both domestic customers and visitors from the mainland.

Prudential's London-listed shares fell by as much as 13 percent on Wednesday. (Reuters)



Edited by Tony Sabine