Participating insurance products
Hang Seng Insurance Company Limited (“Hang Seng Insurance”) issues participating policies, which are life insurance contracts providing both guaranteed and non-guaranteed benefits. The guaranteed benefits may include the following: 1) guaranteed death benefits, 2) guaranteed cash values, 3) guaranteed annuity payments, 4) guaranteed maturity values and 5) endowment coupon. The non-guaranteed benefits include policy dividends, which may be paid or varied at the discretion of “Hang Seng Insurance”. The policy dividends, if any, are in form of:
The key feature of participating policies over other forms of insurance policies is that in addition to the guaranteed benefits receivable, policyholders will also benefit from additional dividend payments if the performance of relevant participating policies is better than that required to support the underlying guarantees. The better the performance, the greater the Annual Dividends and/or Terminal Dividend and/or Special Dividend payments, and, conversely, the worse the performance, the lower the Annual Dividends and/or Terminal Dividend and/or Special Dividend payments.
Annual Dividends, Terminal Dividend and Special Dividend allow policyholders to participate in the financial performance of the life insurance operations. Whether Annual Dividends, Terminal Dividend and Special Dividend are payable and the size of these dividends which “Hang Seng Insurance” distributes or pays depend on the performance of relevant participating policies with regard to investment returns on the assets supporting the policies, as well as other factors including but not limited to claims, persistency, expenses, and the long term future performance outlook (both economic and non-economic factors). Performance of policies managed similarly are pooled together when deciding the amount of Annual Dividends, Terminal Dividend and Special Dividend to be paid. Please refer to section “Product risks - Risk affecting Non-guaranteed benefit determination” on the product brochure for the detail of key risk factors.
“Hang Seng Insurance” regularly reviews the level of Annual Dividends, Terminal Dividend and Special Dividend payable to policyholders. Both the past actual performance and management's expectations of the long-term future performance will be assessed against the expected level . If variances arise, “Hang Seng Insurance” may consider sharing profit or loss with policyholders through the adjustment of Annual Dividends, Terminal Dividend and Special Dividend scales. If the performance over the long term is better than expected, then the dividend amount paid would increase. If performance is below expectation, then dividend amount paid would decrease.
When considering the adjustment of Annual Dividends, Terminal Dividend and Special Dividend scales, “Hang Seng Insurance” strives to maintain a more stable payout to the policyholders by smoothing. This means that the Annual Dividends, Terminal Dividend and Special Dividend level will only be changed if the actual performance is significantly different from the expected level over a certain period of time or if management’s long-term future performance expectations change substantially.
In order to achieve broad fairness between policyholders of participating products, “Hang Seng Insurance” will carefully consider the experiences of different groups of policies so that each group of policies will receive a fair return reflecting mostly its own performance. “Hang Seng Insurance” has also established a dedicated committee to review the fairness of treatment to policyholders and to provide independent advice on the management of the participating policies and the determination of dividend level.
Hang Seng Insurance operates an investment strategy with key objectives as follows:
Participating policy (Policy currency: HKD/USD)
The assets supporting the participating policies assets are carefully managed and monitored according to a predefined set of risk appetite. The asset portfolio predominantly consists of fixed income assets issued by government and corporate entities with good credit quality and long term prospects. Growth assets, including equity, property, hedge fund, private equity and etc. are managed on prudent basis and utilized in order to enhance investment performance in the long run. Subject to our investment strategy, derivatives may be used for hedging or efficient portfolio management.
The asset portfolio is well diversified in different types of assets, and is invested in different geographical markets (mainly Asia, US and Europe) and industries. Investment for fixed income assets are mainly in HKD and USD to match the currency of the underlying policies while growth assets are invested in various currencies for diversification.
Participating policy (Policy currency: CNY)
The assets supporting the participating policies are carefully managed and monitored according to a predefined set of risk appetite. The asset portfolio predominantly consists of fixed income assets (including both onshore bonds in China Inter-bank Bond Market (“CIBM”) and offshore bonds in offshore (“CNH“) Renminbi market) and equities.
Subject to our investment strategy, derivatives may be used for hedging or efficient portfolio management. However, investing in CNY-denominated assets is subject to applicable laws, regulations and guidelines issued by relevant regulatory authorities from time to time. Any change of the applicable laws, regulations and guidelines may lead to an update to the investment strategy and the associated investment performance may be affected.
Target asset allocation
The current long-term target strategy is to allocate assets attributed to this product as follows:
There could be slight deviation from the above range due to market fluctuation.
Actual allocations will take into consideration past investment performance of the assets supporting the policies, prevailing market conditions and future outlook, and the guaranteed and non-guaranteed benefits of the policies. As the performance of the growth assets investment plays an important role in determining the level of non-guaranteed benefits, under normal circumstances and free from any investment and operational constraints, it is expected that the allocation to growth assets will fall within the higher end of the range as specified, in order to optimize the chance of achieving the illustrated level of non-guaranteed benefits. The management and investment strategy of the asset portfolio may be subject to change depending on the market conditions and economic outlook, and we would inform policyholders should there be any material changes.
Accumulation interest rate
Policyholders can choose to accept their Annual Dividends, and/or endowment coupon and/ or annuity payments either in cash or to leave them with “Hang Seng Insurance” to accumulate with interests (if applicable).
Policyholders can choose to exercise the Policy Value Management Option to lock-in a portion of Net Cash Value or Guaranteed Cash Value and non-guaranteed Special Dividend (if any) to the Policy Value Management Balance to accumulate with interests.
Policyholders can submit a written request to “Hang Seng Insurance” to change the default Death Benefit Settlement Option. If monthly instalments is selected, the remaining balance of any unpaid Death Benefit will be held at a non-guaranteed interest rate until the full amount of the Death Benefit has been paid to the Beneficiary(ies).
The rates of interests are not guaranteed and will be determined by “Hang Seng Insurance” from time to time. The review on such interest rates will be conducted regularly with reference to the portfolio bond yields, prevailing market conditions, outlook on bond yields, and the likelihood of policyholders leaving their payment for accumulation.
The policy in determining the policy dividends and accumulation interest rates may be reviewed and adjusted by “Hang Seng Insurance” from time to time. For more updated information, please visit here . You may also visit the above website to understand the historical fulfilment ratio of dividend distribution for reference purposes. However, the past performance or current performance of “Hang Seng Insurance”’s business may not be a guide for future performances.