Hong Kong’s Insurance Authority (IA) has approved CNNC Captive Insurance Limited, a captive insurer established by China National Nuclear Corporation, adding another corporate-owned vehicle to the captive market in Hong Kong.

The authorisation, granted on March 3, is the first captive approval of the year and brings the number of captives domiciled in Hong Kong to seven.

CNNC Captive is structured to insure risks within the China National Nuclear Corporation group, consistent with the city’s regime for group-owned general insurers. “Captives have already become a major component of enterprise risk management for global business corporations. We are encouraged by formation of the CNNC Captive Insurance Limited and will actively develop potential opportunities in the Chinese Mainland as well as other parts of Asia, introducing to stakeholders the unique value proposition of Hong Kong,” IA chief executive officer Clement Cheung said in a statement. The IA has incorporated captives into its approach to risk management for regional corporates and cross-border groups.

Mainland and multinational sponsors broaden base

The CNNC approval follows several captive formations by industrial and financial groups using Hong Kong as a domicile. In August 2025, the IA authorised SAIC Motor Insurance Limited, a captive formed by SAIC Motor Corporation Limited, the second captive approval in that calendar year. Earlier, in May 2025, HSBC Group established Wayfoong (Asia) Limited, the first Hong Kong captive sponsored by a multinational enterprise.

These entities sit alongside captives owned by Mainland Chinese state-owned enterprises and industrial conglomerates, including energy and manufacturing groups. Sponsors typically use the vehicles to self-insure defined portions of group exposures, retain risk within the group balance sheet, and apply consistent coverage terms across business units and territories. The cluster of Hong Kong-based captives is creating opportunities for specialised fronting, reinsurance, risk advisory, and alternative risk transfer arrangements, particularly where sponsors operate across Asia-Pacific markets.

Framework and incentives for captive formation

Hong Kong’s legal framework defines a captive insurer in section 2(7) of the Insurance Ordinance (Cap. 41) as a company authorised to write general insurance business only, subject to prescribed limitations. The business of a captive cannot cover statutory compulsory insurance classes and is confined to risks within or closely linked to the corporate group. Permitted activities include insurance and reinsurance of risks of corporate entities within the sponsor’s group, proportional shares of risks to which the group is directly exposed, and other risks over which the group has control, oversight, management, or a sufficient connection. Under the ordinance, captives are limited to intra-group risks rather than the open retail or commercial market.

Captives are subject to a dedicated capital regime under the Insurance (Marine Insurers and Captive Insurers) Rules (Cap. 41U). The prescribed capital amount is determined using a simplified calculation based on net premiums or relevant claims outstanding, with a minimum capital base of HK$2 million. General business insurers, in contrast, fall under the broader risk-based capital framework in the Insurance (Valuation and Capital) Rules (Cap. 41R), which includes market, insurance, counterparty default, other, and operational risks and requires a minimum capital base of HK$20 million.

Additional regulatory concessions include an exemption from the onshore asset maintenance requirement that applies to non-Hong Kong general insurers with Hong Kong risks. Captives are also exempt from the mandatory appointment of a certifying actuary and follow a notification-based process for key persons in control functions, with the IA informed after an appointment rather than granting approval beforehand. From a tax perspective, Hong Kong grants a 50% profits tax reduction on insurance business of offshore risks written by captive insurers, effective from the 2013/14 year of assessment. According to government policy, the measure is designed to encourage local and overseas groups to establish captives in the jurisdiction.

Current list of authorised captives in Hong Kong

As of Feb. 13, seven captive insurers are authorised to conduct insurance business in or from Hong Kong. They are:

CGN Captive Insurance Limited
CNNC Captive Insurance Limited
CNOOC Insurance Limited
SAIC Motor Insurance Limited
Shanghai Electric Insurance Limited
Sinopec Insurance Limited
Wayfoong (Asia) Limited

These entities are domiciled in Hong Kong and are used by both Chinese corporate sponsors and multinational groups for managing Asian and global risk exposures through captive structures.