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Home >> Business
UPDATED: 17:16, March 15, 2006
New reports affirm stable outlook on HK insurance sector
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Standard & Poor's said in two reports published on Wednesday that it had affirmed its stable outlook on Hong Kong's insurance industry, citing strong business growth opportunities for the life insurance sector.

In a report titled "Hong Kong Nonlife Insurance Outlook Remains Stable Despite Declining Underwriting Profit," the rating agency noted the likelihood that operating performances in both the life and nonlife sectors will remain buoyant through 2006.

Standard & Poor's said the balance sheets of companies in the general insurance sector have benefited from a fourth successive year of satisfactory underwriting performances.

The report said that despite signs that premium rates are stabilizing in the employee compensation sub-sector, which has performed poorly in the past, the outlook on the industry may be revised if price-cutting intensifies elsewhere or if a recent decline in underwriting profits accelerates.

"Positively, the sector's performance is expected to remain generally favorable, underpinned by contained economic growth, and general positive operating performances over the short term," said Standard & Poor's credit analyst Paul Clarkson. Relatively stable investment performances are also likely to help.

In another report titled "Hong Kong Life Insurance Outlook Stable on Strong Growth Opportunities," Standard & Poor's said the life insurance sector's medium-term growth prospects remain strong given relatively low penetration, increased awareness of insurance and investment needs, and high household saving rates.

It cautioned, however, of shifting investor preferences and warned that growth of traditional life insurance product may be impeded by increasing competition from other financial products in an environment of increasing interest rates.

Source: Xinhua


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