XN000022-1984-01-11 — Page 17

WEDNESDAY, JANUARY 11, 1984

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CORPORATION STILL FACING DIFFICULTIES FROM PAST

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THE DIFFICULTIES FACING THE HONG KONG EXPORT CREDIT INSURANCE CORPORATION IN 1982-83 WERE NOT YET A THING OF THE PAST, THE SECRETARY FOR TRADE AND INDUSTRY, THE HON E.P. HO SAID IN THE LEGISLATIVE COUNCIL TODAY.

TWO MAJOR INSOLVENCIES HAD OCCURRED IN EUROPE IN THE CURRENT YEAR, AND THE PROBLEMS ARISING FROM THE INDEBTEDNESS OF A NUMBER OF COUNTRIES WERE A LONG WAY FROM BEING RESOLVED, MR HO TOLD THE COUNCIL WHEN TABLING THE REPORT AND ACCOUNTS OF THE CORPORATION FOR 1982-83.

+IN ADDITION, THE CORPORATION'S RE-INSURER GAVE NOTICE OF TERMINATION OF THE RE-INSURANCE TREATY WITH EFFECT FROM SEPTEMBER 1, 1983 UNLESS THE CONTRACT WAS RE-WRITTEN IN TERMS WHICH WERE UNACCEPTABLE.

+ACCORDINGLY, THE CORPORATION IS WITHOUT RE-INSURANCE COVER AT PRESENT, BUT ON THE ADVICE OF THE ADVISORY BOARD DISCUSSIONS ARE IN PROGRESS WITH OTHER INTERESTED RE-INSURERS,+ MR HO SAID.

HE REPORTED THAT IN THE PERIOD UNDER REVIEW, THE LARGE CLAIMS PAYABLE WERE DIRECTLY ATTRIBUTABLE TO THE RECESSION IN HONG KONG'S MAJOR OVERSEAS MARKETS WHICH HAD BROUGHT ABOUT BANKRUPTCIES IN ITS WAKE WHILE POLITICAL INSTABILITY IN OTHER MARKETS HAD ADDED TO THE SUBSTANTIAL CLAIMS ON THE CORPORATION.

+OVERALL, BUYER RISKS (1.E. WHERE THE OVERSEAS BUYER DEFAULTS ON PAYMENT OR BECOMES INSOLVENT OR REPUDIATES THE CONTRACT) ACCOUNTED FOR SOME 79 PER CENT OF PAYMENTS AND COUNTRY RISKS FOR 21 PER CENT.

+THE PERCENTAGES OF THESE TWO TYPES OF RISKS FOR 1981-82 WERE 84 PER CENT AND 16 PER CENT RESPECTIVELY. THE AREAS OF MAJOR CLAIMS IN 1982-83 WERE THE UNITED KINGDOM, LATIN AMERICA AND AFRICA, + MR HO DISCLOSED.

IN 1982-83 THERE WAS MODERATE GROWTH IN THE CORPORATION'S BUSINESS - A NET INCREASE OF 148 POLICIES ISSUED, BRINGING THE TOTAL TO 1 357, A SMALL INCREASE IN THE VALUE OF TOTAL INSURED EXPORTS AT $3 919 MILLION, AND EIGHT PER CENT GROWTH IN GROSS PREMIUM INCOME TO $21 MILLION.

BUT UNFAVOURABLE MARKET CONDITIONS OVERSEAS RESULTING IN THE PAYMENT OF A NUMBER OF BIG CLAIMS AND THE WRITING OFF OF $7.8 MILLION OF THE EXPENDITURE ARISING FROM OFFICE REMOVAL, FITTING OUT OF THE NEW PREMISES AND COMPUTER HARDWARE PURCHASE, LED TO A NET DEFICIT OF $6 MILLION FOR THE YEAR.

AS IN THE PREVIOUS YEAR, EXPORTS INSURED WITH THE CORPORATION REPRESENTED JUST UNDER FIVE PER CENT OF HONG KONG'S TOTAL DOMESTIC EXPORTS, MR HO SAID.

EUROPE REMAINED THE CORPORATION'S LARGEST EXPOSURE AREA WITH A STABLE $2 463 MILLION OF INSURED EXPORTS.

WHILE THERE