Manulife pulls $80M loan product for wealthy HK clients after scrutiny

Manulife Financial Corp. withdrew a leveraged insurance product for wealthy Hong Kong clients after the offering drew regulatory scrutiny, people familiar with the matter said.

"The company regularly reviews its policy services and makes adjustments based on day-to-day operations," a Manulife spokesperson said. Insurance Authority Chief Executive Officer Clement Cheung declined to comment on individual cases.

The product allowed clients to buy a policy with a notional value of as much as $80 million using leverage of nearly four times, according to marketing materials seen by Bloomberg News. Clients put up $14.4 million and borrowed $56 million at a fixed rate of 3.39 percent for five years. Other policy loans available to retail clients carry borrowing costs of about 7 percent.

While premium financing is common among high-net-worth individuals, the plan drew attention for its aggressive leverage and unusually low financing cost. The product was pitched as offering returns exceeding 10 percent, the marketing materials showed.

The withdrawal signals heightened regulatory scrutiny of leveraged insurance products in Hong Kong, which could pressure other insurers offering similar structures. Manulife shares traded 0.9 percent higher in Hong Kong on Wednesday.

The withdrawal suggests regulators are tightening oversight of premium financing products that blend insurance with embedded leverage. Industry participants will watch for any broader guidance from the Insurance Authority on policy loan structures.

This article is for informational purposes only and does not constitute investment advice.