HSBC 2005 Annual Report Download - page 36

HSBC HOLDINGS PLC
Financial Review (continued)
34
Income from assets designated at fair value and
held to meet liabilities under insurance and
investment contracts during 2005 is correlated with
increases in liabilities under the related investment
and insurance contracts. Under IFRSs, only
investment contracts can be designated as financial
instruments. Changes in the liability under these
contracts, therefore, like the related assets, are
included within the heading ‘Net income from
financial instruments designated at fair value’. The
element of the increase in liabilities under insurance
contracts that reflects investment performance is
reported separately within ‘Net insurance claims
incurred and movements in policyholders’ liabilities’.
In 2004, investment income on assets backing
policyholder liabilities was offset against the
movement in policyholders’ liabilities without
distinction between insurance and investment
contracts.
Gains less losses from financial investments
Year ended 31 December
2005
US$m %
2004
US$m %
By geographical region
Europe .................................................................................................. 439 63.4 154 28.5
Hong Kong ........................................................................................... 108 15.6 175 32.4
Rest of Asia-Pacific .............................................................................. 18 2.6 17 3.1
North America ...................................................................................... 88 12.8 160 29.7
South America ...................................................................................... 39 5.6 34 6.3
Gains less losses from financial investments ........................................ 692 100.0 540 100.0
2005
US$m
2004
US$m
Net gain from disposal of:
– debt securities .............................................................................................................................. 138 202
– equity securities ........................................................................................................................... 505 296
– other financial investments .......................................................................................................... 742
650 540
Recovery of impairment losses ....................................................................................................... 42 –
Total gains from financial investments ........................................................................................... 692 540
The net gain of US$692 million from the disposal of
available-for-sale financial investments was
28 per cent higher than in 2004. Lower income from
the disposal of debt securities was more than
compensated for by an increase in gains from the
disposal of private equity investments, particularly in
HSBC’s European operations.