ENG-2005 — Page 114

84 | Financial and Monetary Affairs

In 2005, the SFC continued to focus its enforcement resources on fighting. corporate misgovernance, market misconduct and intermediaries who are dishonest or put clients at risk. By the end of the year, the number of outstanding investigations of listed company had increased to 16 from 14 at the end of 2004. During the year, the SFC successfully prosecuted five entities for market manipulation and false or misleading disclosure and summonses were issued to an additional 14 entities but those cases were not concluded by year-end. In the previous year, there were 10 successful prosecutions and four outstanding cases. There were 29 referrals to the Police and the Independent Commission Against Corruption (ICAC).

Insurance Sector

Main Features

At year-end, there were 175 authorised insurers, 89 of which were incorporated in Hong Kong while the remaining 86 were incorporated on the Mainland and in 20 overseas countries, with the United States taking the lead.

The total gross premiums of the insurance industry reached $122 billion in 2004, representing 19.5 per cent growth over 2003. However, gross premiums of the general insurance sector decreased by 5.2 per cent to $23.5 billion in 2004, with the major business lines of general liability, property damage and motor vehicles registering premium decline. Underwriting performance still improved from a profit of $1.34 billion in 2003 to $1.95 billion in 2004.

The long-term insurance business continued to attain double-digit annual growth from 1991 to 2004, with office premiums increasing by 27.4 per cent to $98.4 billion in 2004. The individual life business remained dominant with the office premiums in force of $82.2 billion, accounting for 83.6 per cent of the total office premiums. The number of individual life policies in force grew by 7.9 per cent to 6 million in 2004.

At year-end, there were 29 163 insurance intermediaries, including 27 519 agents (of whom 1 644 were agency firms) and 471 brokers.

Insurance Authority

The Commissioner of Insurance, appointed by the Chief Executive as the Insurance Authority (IA), has the principal function (under the Insurance Companies Ordinance (ICO)) to regulate and supervise the insurance industry to promote its general stability and protect existing and potential policy holders.

The ICO, which prescribes a comprehensive regulatory framework for all classes of insurance business, has the two main objectives of ensuring the financial stability of all insurers authorised in Hong Kong and the fitness and propriety of their management. These objectives are achieved through the prescription of, inter alia, the minimum share capital and the solvency margin requirements, and the requirement for directors and controllers of insurers to be fit and proper persons.

A general business insurer is also required to maintain assets in Hong Kong to meet the claims of Hong Kong policyholders. For life insurance business, a fully