HSBC 2009 Annual Report Download - page 295

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Risk management of insurance operations
49 HSBC has no insurance manufacturing subsidiaries in the Middle East.
50 Insurance contracts and investment contracts with discretionary participation features (‘DPF’) can give policyholders the contractual
right to receive, as a supplement to their guaranteed benefits, additional benefits that may be a significant portion of the total
contractual benefits, but whose amount and timing are determined by HSBC. These additional benefits are contractually based on the
performance of a specified pool of contracts or assets, or the profit of the company issuing the contracts.
51 Although investment contracts with DPF are financial investments, HSBC continues to account for them as insurance contracts as
permitted by IFRS 4.
52 Net written insurance premiums represent gross written premiums less gross written premiums ceded to reinsurers.
53 Term assurance includes credit life insurance.
54 Other assets comprise shareholder assets.
55 Present value of in-force long-term insurance contracts and investment contracts with DPF.
56 Does not include assets, liabilities and shareholders’ funds of associated insurance company, Ping An Insurance, or joint venture
insurance companies, Hana Life and Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited.
57 Comprise life linked insurance contracts and linked long-term investment contracts.
58 Comprise life non-linked insurance contracts and non-linked long-term investment contracts.
59 Comprises non-life insurance contracts.
60 Does not include financial assets of associated insurance company, Ping An Insurance, or joint venture insurance companies, Hana
Life and Canara HSBC Oriental Bank if Commerce Life Insurance Company Limited.
61 Comprise mainly loans and advances to banks, cash and intercompany balances with other non-insurance legal entities.
62 The table excludes contracts where the market risk is 100 per cent reinsured.
63 Excluding guarantees from associated insurance company, Ping An Insurance, or joint venture insurance companies, Hana Life and
Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited.
64 Impairment is not measured for debt securities held in trading portfolios or designated at fair value, as assets in such portfolios are
managed according to movements in fair value, and the fair value movement is taken directly through the income statement.
Consequently, all such balances are reported under ‘neither past due nor impaired’.
65 Shareholders’ funds comprise solvency and unencumbered assets.
66 Does not include treasury bills, other eligible bills and debt securities held by associated insurance company, Ping An Insurance, or
joint venture insurance companies, Hana Life and Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited.
67 Does not include reinsurers’ share of liabilities under insurance contracts and reinsurance debtors of associated insurance company,
Ping An Insurance, or joint venture insurance companies, Hana Life and Canara HSBC Oriental Bank of Commerce Life Insurance
Company Limited.
68 Do not include insurance contracts issued by associated insurance company, Ping An Insurance, or joint venture insurance companies,
Hana Life and Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited.
69 Do not include investment contracts issued by associated insurance company, Ping An Insurance, or joint venture insurance
companies, Hana Life and Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited.
70 In most cases, policyholders have the option to terminate their contracts at any time and receive the surrender values of their policies.
These may be significantly lower than the amounts shown above.
71 Value of net new business during the year is the present value of the projected stream of profits from the business.
72 Experience variances include the effect of the difference between demographic, expense and persistency assumptions used in the
previous PVIF calculation and actual experience observed during the year.
Capital management and allocation
73 Includes externally verified profits for the year to 31 December 2009.
74 Mainly comprises unrealised losses on available-for-sale debt securities within special purpose entities which are excluded from the
regulatory consolidation.
75 Under FSA rules, unrealised gains/losses on debt securities net of tax must be excluded from capital resources.
76 Under FSA rules, the defined benefit liability may be substituted with the additional funding that will be paid into the relevant schemes
over the following five year period.
77 Mainly comprise investments in insurance entities.
78 Under FSA rules, collective impairment allowances on loan portfolios on the standardised approach are included in tier 2 capital.
79 Opening capital items as at 1 January 2008 are pro forma and unaudited.
80 Rights issue excludes US$493 million of losses arising on derivative contracts and certain fees, which are recognised in the income
statement.
81 HSBC Bank Malaysia was transferred within the Group to the ownership of The Hongkong and Shanghai Banking Corporation with
effect from 2 January 2009.