HSBC 2005 Annual Report Download - page 37

35
Net earned insurance premiums
Year ended 31 December
2005 2004
US$m % US$m %
By geographical region
Europe ....................................................................................................... 1,599 29.4 1,875 34.9
Hong Kong ................................................................................................ 2,334 42.9 2,247 41.9
Rest of Asia-Pacific ................................................................................... 155 2.9 97 1.8
North America ........................................................................................... 602 11.1 553 10.3
South America ........................................................................................... 746 13.7 596 11.1
Net earned insurance premiums ................................................................. 5,436 100.0 5,368 100.0
Year ended 31 December
2005
US$m
2004
US$m
Gross insurance premium income ................................................................................................... 6,152 6,022
Reinsurance premiums ................................................................................................................... (716) (654)
Net earned insurance premiums ...................................................................................................... 5,436 5,368
Net earned insurance premiums of US$5,436 million
increased by US$68 million compared with 2004.
On an underlying basis, net earned insurance
premiums were in line with 2004.
Under IFRSs, in 2005 there were changes in the
presentation of certain aspects of HSBC’s insurance
business, which are now treated as liabilities under
investment contracts. Investment income from these
products is now reported as ‘Net income from
financial investments designated at fair value’.
Income that was previously reported as ‘Net earned
insurance premiums’ is now taken directly to the
balance sheet as customer liabilities, with a
corresponding movement in net insurance claims.
Net insurance claims have fallen to a greater extent
than premium income, due to the additional impact
of the reclassification of the fair value movement in
respect of liabilities under investment contracts.
The commentary that follows excludes the
presentational changes discussed above, and is on an
underlying basis.
Higher premium income in Europe was due to
an increased uptake of creditor protection products
in the UK.
The increase in premiums in Hong Kong
reflected HSBC’s continued emphasis on the growth
and development of its insurance proposition. Higher
volumes of life assurance new business were directly
driven by the launch of new endowment products,
augmented by HSBC’s leading position in online
personal insurance provision. In addition, greater
demand for private medical insurance products was
driven by the public response to government
deliberation over reforms to healthcare financing.
Investment in HSBC’s insurance business included
the establishment of a new Commercial Banking
insurance division in October, which positively
contributed to higher volumes of new business.
In the Rest of Asia-Pacific, the increase in
premiums was mainly attributable to growth in the
number of personal insurance policies, resulting
from an expansion of HSBC’s insurance operations
in the region.
In North America, increased cross-sales of
insurance products through the branch network,
combined with strong sales of other personal
insurance-related products, resulted in an increase in
net earned insurance premiums.
On an underlying basis, net earned insurance
premiums in South America were broadly in line
with 2004.