Secretary for Financial Services and the Treasury Christopher Hui said he was confident in Hong Kong's insurance products.

Shares in major insurers fell sharply on Thursday, a day after Beijing-based news website Caixin reported that tax authorities in the capital, as well as Hangzhou, began taxing residents' earnings from offshore insurance policies. A tax rate of 20 percent was levied on policy dividends and interest earned on prepaid premiums, the report said, citing industry insiders.

AIA slid 8.5 percent, FWD was down 5.2 percent and Prudential fell more than 5 percent.

Hui was asked about the report during a press conference on the launch of a new batch of silver bond.

"The government and regulatory bodies have always maintained communication with relevant mainland departments on various policies and measures," he said.

"As to the situation you mentioned, we have confidence in the products offered by Hong Kong's insurance industry... In terms of competitiveness, our product design and distribution channels, we have confidence in these aspects."

Hui went on to say that Hong Kong, as an international financial hub, serves clients from different parts of the world, provided they "abide by taxation laws".

"Whether they are rumours or speculation, they happen every day. But at the same time, more importantly we have to do our best and ensure that amid changing circumstances, our products and services remain competitive in different financial sectors, and we're confident on this front."

While declining to comment on individual reports, the minister pointed out that Hong Kong is part of 120 or so tax jurisdictions that observe the Common Reporting Standard, a mechanism that facilitate the exchange of financial account information in tax matters. (Additional reporting by Reuters)



Edited by Edmond Fong