ENG-2001 — Page 122

FINANCIAL AND MONETARY AFFAIRS

78

Developments in Recent Years

During the year, the SFC conducted a comprehensive review of the Takeovers and Share Repurchases Codes and consulted the public on a number of proposals. On the completion of the consultation, the SFC in October 2001 announced the amendments to the Code on Takeovers and Mergers with immediate effect. The trigger threshold was reduced from 35 per cent to 30 per cent and the creeper from 5 per cent to 2 per cent in any 12-month period. Transitional provisions were put in place for 10 years for shareholders affected by the change.

In December 2000, the SFC issued a revised Fit and Proper Criteria and the Guidance Note on Competence and the Guidance Note on Continuous Professional Training to affirm the professional standard of financial intermediaries in Hong Kong. The new requirements came into effect in April 2001.

The SFC also consulted the market on a proposed Investor Compensation Arrangement during the year. The new arrangement is based on a per investor compensation limit, as opposed to the old per broker limits, enabling more transparency and allowing investors to know precisely what level of compensation is available to them should their intermediary fail. Comments from the market were reviewed and the new arrangement will become effective when the new regulatory framework introduced under the Securities and Futures Bill is brought into operation.

Insurance Sector

Main Features

Hong Kong is one of the most open insurance centres in the world. At the end of 2001, there were 204 authorised insurers, 99 of which were incorporated in Hong Kong and the remaining 105 were incorporated in 24 overseas countries or the Mainland, with the United States taking the lead to be followed by the United Kingdom.

Notwithstanding the economic slowdown, the total gross premiums of the insurance industry reached $64.4 billion in 2000, representing a 11.4 per cent growth over 1999. Gross premiums of the general insurance sector increased by 8.1 per cent to $17.9 billion in 2000. Accident and Health, General Liability and Pecuniary Loss have recorded the most significant growth. Underwriting performance, however, continued to be unfavourable, with an overall loss of $872 million.

The long-term insurance business continued to attain a double-digit growth, with office premiums increasing by 12.6 per cent to $46.5 billion in 2000. The office premiums in force of individual Life business amounted to $35.6 billion, accounting for 76.6 per cent of the total office premiums. The number of Individual Life policies in force grew by 8.5 per cent to 4.6 million in 2000, covering 69.1 per cent of Hong Kong's population.

At the end of 2001, there were 33 187 insurance intermediaries, including 32 788 agents (of whom 2 517 are agency firms) and 399 brokers.