XN000022-1977-08-10 — Page 22

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WEDNESDAY, AUGUST 10, 1977

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EXPORT CREDIT INSURANCE LIABILITY INCREASED

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THE LEGISLATIVE COUNCIL TODAY ENDORSED A PROPOSAL TO INCREASE THE MAXIMUM CONTINGENT LIABILITY OF THE EXPORT CREDIT INSURANCE CORPORATION FROM HK$1,750 MILLION TO HK$2,000 MILLION.

ACTING FINANCIAL SECRETARY, THE HON. DAVID JEAFFRESON, IN MOVING A MOTION, TOLD THE COUNCIL THAT THE CORPORATION'S ADVISORY BOARD HAD UNANIMOUSLY ADVISED THAT THE MAXIMUM CONTINGENT LIABILITY BE INCREASED TO HK$2,000 MILLION AS THE EXISTING STATUTORY LIMIT OF $1,750 MILLION MIGHT BE REACHED BY THE END OF THIS YEAR.

+FAILURE TO RAISE THE LIMIT WOULD RESULT IN THE CORPORATION HAVING TO TURN AWAY FURTHER BUSINESS, HE SAID.

MR. JEAFFRESON EXPLAINED THAT THIS MAXIMUM LIABILITY WAS A THEORETICAL AMOUNT AND NEVER LIKELY TO BE AT RISK AT ANY ONE TIME.

+THE CORPORATION ESTIMATES THE ACTUAL FIGURE AT RISK AT ANY ONE TIME AT HK$450 MILLION TO HK$500 MILLION, HE SAID.

HE SAID THAT SINCE THE COUNCIL HAD AGREED TO AN INCREASE FROM HK$1,250 MILLION TO HK$1,750 MILLION THREE YEARS AGO, THE CORPORATION'S LIABILITY UNDER CONTRACTS OF INSURANCE HAD RISEN BY MORE THAN HK$300 MILLION, AND AT THE END OF LAST MONTH STOOD AT NEARLY HK$1,500 MILLION.

+THE CORPORATION NOW SERVICES ABOUT 900 POLICIES AND PROTECTS EXPORTS ON CREDIT TERMS TO VIRTUALLY ALL HONG KONG MARKETS. AT ANY ONE TIME ALMOST $500 MILLION OF HONG KONG'S EXPORTS ARE COVERED BY THE CORPORATION'S POLICIES, HE SAID.

+ INCREASES IN THE CONTINGENT LIABILITIES THE CORPORATION IS ASSUMING, ARE BROUGHT ABOUT BY BOTH THE CORPORATION ISSUING NEW POLICIES AND BY INCREASES IN THE VALUE OF INSURABLE BUSINESS CARRIED OUT BY EXISTING POLICY HOLDERS, THE ACTING FINANCIAL SECRETARY ADDED.

AT PRESENT THE CONTINGENT LIABILITIES OF THE CORPORATION ARE INCREASING AT A RATE OF ABOUT HK$45 MILLION EACH QUARTER.

IN THE LAST FINANCIAL YEAR THE CORPORATION PAID OUT A TOTAL OF HK$6.9 MILLION IN RESPECT OF CLAIMS DURING THE YEAR. AND THERE WERE ALTOGEHTER 45 CLAIMS, MOST OF WHICH DERIVED FROM COMMERCIAL RATHER THAN POLITICAL REASONS.

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