INNEX C
HONG KONG: INSURANCE COMPANIES
Thirty-one UK insurance companies are active in Hong Kong, together with Lloyd's. The attached list gives details.
2 Most of the insurers active in Hong Kong undertake general (ie non-life) business. In so far as most of these operations are relatively small, the DTI returns made by the companies do not reveal a detailed breakdown; and the shareholder accounts will normally aggregate Hong Kong activities with other international operations. But normal insurance business principles would require non-life liabilities in Hong Kong to be matched with Hong Kong assets; and these in turn will mainly be in the form of deposits, Government bonds and other secure and liquid instruments. Equities and property would typically form a very small or zero part of the asset portfolio.
3 Those life companies doing business in Hong Kong would again naturally match most (though not necessarily all) their liabilities with Hong Kong assets, though in this case there would be a rather greater equity exposure. But these businesses will all be small, and the net corporate exposure to Hong Kong arising from them will be very small indeed.
A
4 Finally, UK insurers, and in particular UK life insurers, may well have some Hong Kong equities and property in their life funds. typical exposure might be about 14% of their overall equity and property portfolios (which together will amount to about 60-70% of their total portfolios). Some will have zero; and some may have a little more than 1%, particularly where the company in question has seen Hong Kong as an attractive alternative to Japan, and an easier location from which to liquidate assets compared with other Far Eastern locations where repatriation of funds can be more difficult. Exposures of these orders, even if their values were reduced to zero over a short period, would not jeopardise the viability of the UK undertakings concerned. In the time available, it has not been possible to do a detailed trawl through all the UK insurance companies to establish which of them have sufficient of their assets in Hong Kong for it to be recorded separately in shareholder accounts or DTI returns; this could be done in slower time if absolutely necessary.
INSURANCE DIVISION February 1993
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