Hong Kong’s Insurance Authority appoints managers to take control of troubled Tahoe Life

Hong Kong’s Insurance Authority has for the first time taken over control of a distressed life insurance company based in the city.

The regulator said in a statement on Friday that it had appointed managers to take control of all assets and operations of Tahoe Life Insurance.

Tahoe Life, indirectly controlled by mainland Chinese developer Tahoe Group’s chairman Huang Qisen, has about 90,000 life policies worth HK$18 billion (US$2.3 billion), giving it a market share of less than 1 per cent, according to the authority.

Since 2021, Tahoe Life has been banned by the authority from issuing new policies, restricted its investments and prevented it from trading with any company with connections to Tahoe Group after a HK$2.2 billion debt investment connected with its parent became worthless in July 2020.

The takeover came after the Insurance Authority and the Securities and Futures Commission undertook a joint investigation over the HK$2.2 billion investment, as it was illegal and was not approved by the insurance regulator.

The company was also unable to issue financial reports in 2022 and 2023 and could not find a new buyer after the financial troubles of its mainland parent came to light.

Policyholders’ rights will not be affected as the current information indicates Tahoe still has the ability to service the existing policies in case policy owners decide to surrender them, the authority said.

The authority has appointed Derek Lai and Forrest Kam from Deloitte Touche Tohmatsu and Oliver Cheng from Deloitte Advisory (Hong Kong) as joint managers to take full control of the company.

The Insurance Authority has tasked the three managers to find insurers to take over Tahoe’s policies under the same conditions so as to ensure policyholders are not affected by the company’s problems.

The Insurance Authority subjected Tahoe Life to a series of restrictions since mid-2020 after finding the management had illegally made the HK$2.2 billion investment. The measures included banning the company from withdrawing bank deposits or assets from the city.

The authority said it was forced to step up its actions and take full control of Tahoe as the company failed to submit audited financial statements for 2022 and 2023 and deliver on promises to bring in new strategic investors and to improve its corporate governance.

“Given that its majority shareholders are embroiled in multiple debt proceedings, appointment of the managers is necessary to ascertain the latest financial and solvency position, preserve capital resources and identify optimal recovery solutions in the best interest of policyholders,” an Insurance Authority spokesman said.

“This is an isolated incident. Our supervisory regime is robust and forward looking. We have confidence that all authorised insurers in Hong Kong are able to fulfil their contractual obligations to policyholders.”

He said the previous ring-fencing measures imposed by the regulator have ensured Tahoe Life can meet its insurance obligations towards policyholders.

“We would like to remind the general public that since life insurance products are designed to reach maturity over a fairly long period of time, policyholders are advised to carefully assess their own circumstances and avoid making hasty decisions,” the spokesman said.

Tahoe Life Insurance was formed in 2017 after mainland Chinese investment firm Tahoe Investment Group acquired Hong Kong’s Dah Sing Life Assurance.