HSBC 2010 Annual Report Download - page 160

HSBC HOLDINGS PLC
Report of the Directors: Operating and Financial Review (continued)
Risk > Risk management of insurance operations > Insurance risk
158
and income protection contracts and annuities.
The risks are monitored on a regular basis,
and are primarily mitigated by underwriting
controls and reinsurance and by retaining the
ability in certain cases to amend premiums in
the light of experience;
• lapses and surrenders: the risks associated with
this are generally mitigated by product design,
the application of surrender charges and
management actions, for example, managing the
level of bonus payments to policyholders. A
detailed persistency analysis at a product level
is carried out at least on an annual basis; and
• expense risk is mitigated by pricing, for
example, retaining the ability in certain cases to
amend premiums and/or policyholder charges
based on experience, and cost management
discipline.
Economic assumptions, such as investment
returns and interest rates, are usually based on
observable market data. Clearly, liabilities are
affected by changes in assumptions (see ‘Sensitivity
of HSBC’s insurance subsidiaries to risk factors’ on
page 165 and ‘Sensitivity analysis’ on page 171).
Analysis of non-life insurance risk – net written insurance premiums74,77
(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
2010
Accident and health ............................................ 78 174 8 3 37 300
Motor .................................................................. – 15 28 – 267 310
Fire and other damage ........................................ 38 29 11 16 22 116
Liability ............................................................... – 20 4 – 2 26
Credit (non-life) .................................................. 25 – – 53 2 80
Marine, aviation and transport ............................ 3 10 4 – 18 35
Other non-life insurance contracts ..................... 20 39 1 9 84 153
Total net written insurance premiums ................ 164 287 56 81 432 1,020
Net insurance claims incurred and movement
in liabilities to policyholders .......................... (169) (117) (25) (13) (201) (525)
2009
Accident and health ............................................ 94 160 7 3 23 287
Motor .................................................................. 123 14 20 – 234 391
Fire and other damage ........................................ 72 22 8 16 22 140
Liability ............................................................... – 15 4 – 2 21
Credit (non-life) .................................................. 35 – – 86 – 121
Marine, aviation and transport ............................ 7 9 4 – 17 37
Other non-life insurance contracts ..................... 24 32 1 12 58 127
Total net written insurance premiums ................ 355 252 44 117 356 1,124
Net insurance claims incurred and movement
in liabilities to policyholders .......................... (748) (107) (17) (96) (155) (1,123)
2008
Accident and health ............................................ 14 155 5 3 27 204
Motor .................................................................. 350 15 14 – 273 652
Fire and other damage ........................................ 150 26 3 4 22 205
Liability ............................................................... – 14 4 – 34 52
Credit (non-life) .................................................. 99 – – 144 – 243
Marine, aviation and transport ............................ – 11 4 – 24 39
Other non-life insurance contracts ..................... 49 28 – 15 29 121
Total net written insurance premiums ................ 662 249 30 166 409 1,516
Net insurance claims incurred and movement
in liabilities to policyholders .......................... (553) (121) (13) (98) (176) (961)
For footnotes, see page 174.