MPF profitability hit

New requirements suddenly imposed by Hong Kong regulators on guaranteed funds just made an already unprofitable venture that more costly.

Service providers for Hong Kongs new Mandatory Provident Fund MPF programme must as of today raise capital reserves for MPF guaranteed funds, according to a letter that was sent yesterday Monday by the Officer of the Commissioner of Insurance. The rules also mean additional systems costs to model the new reserve requirements. This has caused a furore among insurance companies, which offer the majority of such funds. Many firms already face a horizon of up to 10 years before they expect to break even on MPF business. The new rules, which could raise costs dramatically, will add to pressures at some small- and mid-sized players to drop out of the MPF business.

The...

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