ENG-2011 — Page 129

Financial and Monetary Affairs 93

the full and true identity of their clients before offering them a product containing a derivative element. Likewise, they are obliged to make sure their clients know clearly what they are investing in.

Other new developments include the regulation of the public offers of structured products in the form of shares of debentures being transferred from the prospectus regime of the Companies Ordinance to the regime for public offers of investments under the SFO. The legislation was enacted in May 2011. Under the new regime, advertisements and offer documents for all structured products that are publicly offered must be authorised by the SFC, unless otherwise exempted by the SFO. The SFC also approved in 2011 the Hong Kong Mercantile Exchange to operate a commodity futures market in Hong Kong where trading began in May 2011 with a physically-settled gold futures contract.

The SFC continued to educate investors in tandem with market developments and regulatory enhancements. The SFC ran a series of campaigns to boost public awareness of new classes of product such as RMB REITs, Hong Kong Depositary Receipts as well as synthetic ETFs, IPO investing and margin trading. Leveraging retail interest in RMB products, the SFC launched a dedicated campaign on bond investing that drew the public's attention to the key features and risks of RMB bonds and funds. A TV campaign, entitled 'Invest prudently/Signing means responsibility' was launched in the fourth quarter of 2011, advising investors to consider carefully before signing any documents and to acknowledge responsibility for their investment decisions.

Insurance Sector

Main Features

At the end of 2011, there were 163 authorised insurers, 85 of which were incorporated in Hong Kong while the remaining 78 were incorporated in the Mainland and in 20 overseas countries, with Bermuda taking the lead.

During the past five years, the Hong Kong insurance industry achieved an average annual growth of 7.7 per cent. In 2011, the total gross premiums of the Hong Kong insurance industry amounted to $225.8* billion, representing an increase of 10.2 per cent over 2010.

*

General insurance business rose in money terms from $31.1 billion in 2010 to $34.7 billion in 2011, representing a 11.6 per cent increase in gross premiums. The growth was largely led by insurance policies relating to property damage and accident and health businesses (comprising medical business). At the same time, the overall underwriting performance of general insurance business showed a rise in profit from $2.5 billion in 2010 to $3 billion in 2011, mainly attributable to the underwriting of pecuniary losses business which surged in 2011 due to release of claims reserve.

* Provisional statistics.