HSBC 2007 Annual Report Download - page 269

267
Analysis of non-life insurance risk – net written insurance premiums1
(Audited)
Europe
Hong
Kong
Rest of
Asia-
Pacific
North
America
Latin
America
Total
US$m US$m US$m US$m US$m US$m
2007
Accident and health ............................................ 27 132 5 – 25 189
Motor .................................................................. 369 15 10 – 224 618
Fire and other damage ........................................ 178 23 7 2 19 229
Liability ............................................................... – 12 3 8 34 57
Credit (non-life) .................................................. 76 – – 157 – 233
Marine, aviation and transport ............................ – 12 4 – 18 34
Other non-life insurance contracts ..................... 30 24 – 30 24 108
Total net written insurance premiums ................ 680 218 29 197 344 1,468
Net insurance claims incurred and movement
in liabilities to policyholders........................... (598) (90) (10) (79) (151) (928)
2006
Accident and health ............................................ 26 97 5 – 10 138
Motor .................................................................. 185 15 13 – 157 370
Fire and other damage ........................................ 221 22 5 2 9 259
Liability ............................................................... 1 13 2 8 24 48
Credit (non-life) .................................................. 264 – – 173 – 437
Marine, aviation and transport ............................ 1 11 3 – 12 27
Other non-life insurance contracts ..................... 13 24 – 37 20 94
Total net written insurance premiums ................ 711 182 28 220 232 1,373
Net insurance claims incurred and movement
in liabilities to policyholders........................... (451) (76) (11) (79) (111) (728)
2005
Accident and health ............................................ 33 67 3 3 6 112
Motor .................................................................. 192 20 11 4 302 529
Fire and other damage ........................................ 251 34 3 5 61 354
Liability ............................................................... 229 17 2 91 14 353
Credit (non-life) .................................................. 225 – – 202 – 427
Marine, aviation and transport ............................ – 16 4 – 22 42
Other non-life insurance contracts ..................... 10 29 – 17 12 68
Total net written insurance premiums ................ 940 183 23 322 417 1,885
Net insurance claims incurred and movement
in liabilities to policyholders........................... (485) (66) (9) (138) (196) (894)
1 Net written insurance premiums represent gross written premiums less gross written premiums ceded to reinsurers.
(Audited)
The above table of non-life net written insurance
premiums provides an overall summary of the
non-life insurance activity of the Group. Motor
business is written predominantly in Europe and
Latin America and represents the largest class of
non-life business in 2007. Fire and other damage to
property business is written in all major markets,
most significantly in Europe. Credit non-life
insurance, which is originated in conjunction with
the provision of loans, is concentrated in the US and
Europe.
The main risks associated with non-life business
are underwriting risk and claims experience risk.
Underwriting risk is the risk that HSBC does not
charge premiums appropriate to the cover provided
and claims experience risk is the risk that portfolio
experience is worse than expected. HSBC manages
these risks through pricing (for example, imposing
restrictions and deductibles in the policy terms and
conditions), product design, risk selection, claims
handling, investment strategy and reinsurance policy.
The majority of non-life insurance contracts are
renewable annually and the underwriters have the
right to refuse renewal or to change the terms and
conditions of the contract at the time.