XN000022-1996-11-22 — Page 14

12 -

Growth in the general business sector had slowed down considerably. Gross premiums of general business registered only a marginal growth of two per cent to $20.1 billion in 1995, compared with an increase of 16 per cent in 1994. Direct business and reinsurance business recorded $15.2 billion and $4.9 billion respectively.

Except for goods in transit business, most major classes of general business experienced much slower growth in gross premiums in 1995 than those in 1994. General liability and accident and health business premiums grew by three per cent and 11 per cent respectively in 1995, compared with 46 per cent and 21 per cent in 1994.

On the other hand, motor vehicle business premiums continued to show a decline of 10 per cent in 1995.

Property damage business remained the largest contributor to general business premiums, accounting for 30 per cent of total gross premiums in 1995. As a result of the decline in motor vehicle business premiums, general liability business replaced motor vehicle business as the second largest class with a market share of 20 per cent which is marginally higher than that of motor vehicle business of 19 per cent.

Compared with the growth of gross premiums, net premiums rose by a relatively higher rate of seven per cent to $13.3 billion in 1995. This can be explained by the increase of retention ratio from 63 per cent in 1994 to 66 per cent in 1995.

Total claims paid of general business was $7.8 billion. After deducting reinsurance recoveries of $ 2.7 billion, total net claims paid amounted to $5.1 billion.

The overall net claims incurred ratio, i.e. net claims incurred to net earned premiums, deteriorated from 52 per cent in 1994 to 54 per cent in 1995.

As regards underwriting performance, Mr Wong pointed out that the general insurance industry continued to enjoy a profit for the third consecutive year in 1995. An overall underwriting profit of $0.7 billion was made, which represented five per cent of net earned premiums.

In the long term business sector, Mr Wong said the total office premiums in force amounted to $23.7 billion in 1995, representing a growth of 22 per cent.

Major contribution continued to come from individual life business with office premiums in force amounting to $16.6 billion at the end of 1995, representing premium per capita of about $2,630. The number of individual life policies in force exceeded 2.8 million which covered about 45 per cent of the Hong Kong population, compared with 41 per cent in 1994. Net liabilities for these policies increased by 25 per cent to $32.6 billion in 1995.