Insurance is designed to protect against disaster. Insurers with business in Hong Kong may face a few problems themselves. Late on Tuesday, Bloomberg reported that China might place caps on offshore insurance purchases, an attempt to stem capital flight. On Wednesday, shares in insurer AIA fell as much as a tenth, rallying through the day to halve the loss.
The sell-off was extreme. True, insurance savings products in Hong Kong have been popular with Chinese mainlanders. Unlimited amounts can be paid into such products using a Chinese-issued credit or debit card. Upon maturity, the funds can be left in an overseas bank. Still, the sums are not large; even if mainlanders had bought all such policies sold outside Hong Kong, that would total $2.7bn in the nine months to last September.
AIA has limited exposure. Analysts estimate that one-third of its Hong Kong business is transacted with mainlanders, amounting to less than a tenth of its total premium income, with most of this coming from regular-payment products. Were sales of savings-type policies to Chinese buyers to halve, Bernstein estimates that the total impact on revenues could be less than 1 per cent.