Industry Updates

General Insurance Market Performance for the first three quarters of 2006

In the first three quarters of 2006, general insurance business remained stable and gross premiums recorded a slight decline of 0.4% to HK$18,026 million compared with the corresponding period of 2005. Net premiums, on the other hand, increased by 0.5% to HK$12,856 million due to a marginally higher retention rate.

Overall underwriting profit of general insurance business substantially increased from HK$860 million to HK$2,034 million. This was mainly attributable to the general improvement in the claims experience recorded in the industry. More prominent was the significant improvement in the underwriting performance of Ships business, which turned from a loss of HK$575 million to a profit of HK$42 million. Property Damage business remained the largest contributor to the overall underwriting profit, albeit reducing from a profit of HK$731 million to HK$612 million. With the significantly improved performance of Ships business, the underwriting result of direct business achieved a profit of HK$1,207 million in the first three quarters of 2006, up from HK$351 million for the corresponding period of 2005.

As regards the two major classes of compulsory insurance business, i.e. Motor Vehicle business and Employees' Compensation business (EC), underwriting profit of Motor Vehicle business moderately increased from HK$162 million to HK$196 million whereas EC business turned from a loss of HK$160 million to a profit of HK$21 million largely due to the significant release of over-provision for past claims.