HSBC 2011 Annual Report Download - page 29

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Overview Operating & Financial Review Corporate Governance Financial Statements Shareholder Information
compared with 2010 were driven by a one-off gain of
US$243m recognised upon the refinement of the
calculation of the PVIF asset to bring greater
comparability and consistency across our insurance
operations, and strong sales of life insurance
products, notably in Hong Kong and Singapore.
Largely offsetting this was a net decrease from
experience and assumption updates and a higher
unwind of cash flows from the growing in-force
book.
Net insurance claims incurred and movement in liabilities to policyholders
2011
US$m
2010
US$m
2009
US$m
Insurance claims incurred and movement in liabilities to policyholders:
– gross .................................................................................................................... 11,631 11,969 12,560
– reinsurers’ share ................................................................................................. (450) (202) (110)
– net36 ..................................................................................................................... 11,181 11,767 12,450
For footnote, see page 95.
Net insurance claims incurred and movement in
liabilities to policyholders decreased by 5% on a
reported basis and by 7% on an underlying basis,
driven by investment losses on insurance assets,
notably in Europe and Hong Kong.
In France, the UK and Hong Kong we
experienced a reduction in the movement in
liabilities to policyholders resulting from a fall in
fair value of the assets held to support policyholder
funds, particularly in relation to unit-linked insurance
contracts and investment and insurance contracts
with DPF, as a result of equity market falls.
The gains or losses experienced on the financial
assets designated at fair value held to support
insurance contract liabilities and investment contracts
with DPF are reported in ‘Net income from financial
instruments designated at fair value’.
Further declines in the movement in liabilities to
policyholders resulted from the non-renewal and
transfer to third parties of certain contracts in our
Irish businesses as well as the continued run-off and
subsequent sale of the motor business in the UK
during 2011.
Reductions in the movement in liabilities to
policyholders were partly offset by additional
liabilities established for new business premiums
written, notably in Hong Kong, Brazil, France, the
UK and Singapore, which are consistent with
increases in net earned premiums.
Loan impairment charges and other credit risk provisions
2011
US$m
2010
US$m
2009
US$m
Loan impairment charges
New allowances net of allowance releases ............................................................ 12,931 14,568 25,832
Recoveries of amounts previously written off ....................................................... (1,426) (1,020) (890)
11,505 13,548 24,942
Individually assessed allowances ............................................................................... 1,915 2,625 4,458
Collectively assessed allowances ............................................................................... 9,590 10,923 20,484
Impairment of available-for-sale debt securities ........................................................ 631 472 1,474
Other credit risk provisions/(recoveries) .................................................................... (9) 19 72
Loan impairment charges and other credit risk provisions ........................................ 12,127 14,039 26,488
% % %
– as a percentage of net operating income excluding the effect of fair value
movements in respect of credit spread on own debt and before loan
impairment charges and other credit risk provisions ............................................. 17.7 20.6 36.4
Impairment charges on loans and advances to customers as a percentage of
gross average loans and advances to customers .................................................... 1.2 1.5 2.8
Loan impairment charges and other credit risk
provisions were US$12.1bn, a decline of 14%
compared with 2010 on a reported basis and 15%
on an underlying basis.
At 31 December 2011, the aggregate balance
of customer loan impairment allowances was
US$17.5bn, representing 1.9% of gross loans and
advances to customers (net of reverse repos and