HSBC 2012 Annual Report Download - page 92

HSBC HOLDINGS PLC
Report of the Directors: Operating and Financial Review (continued)
Geographical regions > Hong Kong
90
Gains less losses from financial investments
were US$322m compared with US$25m in 2011,
largely from the gain of US$314m on the sale of our
shares in four non-strategic investments in India.
Net earned insurance premiums grew by 17%
following increased new sales and renewals of life
insurance products. The growth in premiums
resulted in a corresponding increase in ‘Net
insurance claims incurred and movement in
liabilities to policyholders’.
Other operating income of US$1.9bn was
US$235m higher than in 2011. We completed the
sale of our shares in Global Payments Asia-Pacific
Ltd and the HSBC and Hang Seng Bank general
insurance businesses, realising gains of US$212m,
US$117m and US$46m, respectively. While the
value of the PVIF asset rose, this was not to the same
extent as in 2011 as increased insurance sales in
2012 were more than offset by lower positive
assumption updates during 2012 compared with
2011and the non-recurrence of the benefit from the
refinement to the PVIF asset calculation in 2011.
Net insurance claims incurred and movement in
liabilities to policyholders increased by 38%, driven
by net investment gains on fair value of the assets
held to support policyholder contracts, compared
with net losses in 2011. In addition, policyholder
liabilities were established for new business,
reflecting the higher premiums, though this was
partly offset by the disposal of the insurance
businesses in 2012.
Loan impairment charges and other credit risk
provisions reduced to US$74m from US$157m
in 2011, largely due to lower specific impairment
charges in CMB and the non-recurrence of charges
relating to available-for-sale Greek sovereign debt
securities.
Operating expenses increased by 2%, primarily
due to higher systems implementation and
processing costs as we continued to invest in our
technology infrastructure, and increased property
rental costs. Salaries and wages were broadly
unchanged as wage inflation was largely offset by
reduced average staff numbers as we continued to
improve efficiency across our operations, generating
sustainable annual savings of approximately
US$190m.