How Insurance Company to Encounter the Economic Downturn in Hong Kong

1. INTRODUCTION

1.1 Background

Since 1997, Hong Kong has been facing the economic downturn that has never been come across in recent decades. The unemployment rate and the number of bankrupts are reaching the new records every month. Pay-cut is just accepted a trend in Hong Kong now.

Insurances are regarded as essential protection for everyone, however, it is also a long-term investment. In the other words, insurances cannot or are not supposed to give the policy owner the short-term benefits. Moreover, for many families burdened with mortgages, tuition payments, and increasing expenses, having one or both salary earners lose their jobs is a very traumatic event. Even for young people just graduating from school, a high unemployment rate means that it will be harder for them to find the job that they want at the pay that they desire. It a fact that the monthly premium payment could become the burden for someone unemployed or with considerate pay-cut. With these regards, it is valuable to evaluate how the insurance industry can survive and even grow in such a situation.

This management project report aims to study the case of Manulife Hong Kong, one of the leading insurance companies in Hong Kong.

2. COMPANY BACKGROUND

2.1 Overview of the Company

Canadian-based Manulife Financial commenced operations in Hong Kong in 1897. Now operating under three wholly-owned subsidiaries – Manulife (International) Limited (MIL), Manulife Funds Direct (MFD) and Manulife Provident Funds Trust (MPFTC) – it is one of the largest financial services organizations in Hong Kong.

Manulife Hong Kong was holding the 2nd position in life insurance market (based on new annualized premiums) and 9% market share in 2002. Manulife Hong Kong enjoyed solid sales growth in its insurance and wealth management businesses in 2002, despite the depressed economic environment and volatile equity markets. Regular premiums and deposits for the fourth quarter totaled HK$2,450 million, an increase of nine per cent over the same period last year. Full-year regular premiums and deposits increased by 13 per cent over 2001 to HK$9,576 million, driven primarily by growth in the individual insurance business.

2.2 Organisation

Currently it has a field force of more than 3,000 full-time agents to service its clients. More than 1,200 of Manulife's agents are licensed to sell mutual funds, which makes it the largest team of professional financial planners in Hong Kong.

2.3 Overall Company Strategy

Manulife Financial has been able to differentiate itself by providing superior value and advice to customers. It has become a market leader by understanding and anticipating the needs of its customers and providing timely, responsive and appropriate solutions. Its broad range of products is designed to meet a variety of customer needs.

Manulife's professional and highly knowledgeable sales force has been trained to assist customers to design appropriate solutions based on the customer's particular needs and financial situation. It offers a range of investment options to suit client risk tolerance; guaranteed products;