Sth British takeovers in HK?

Press, 20 August 1983, Page 21

Sth British

takeovers in HK?

NZPA staff correspondent David Porter Hong Kong

South British Insurance envisages taking over and managing a number of the smaller companies which proliferate in Hong Kong, the firm’s Hong Kong manager, Mr Roly Lennox-King, said.

“We are thinking more in terms of management than acquisition,” said Mr Lennox-King, who suggested the territory’s more than 200 insurers could come down to less than half that number in the future.

Mr Lennox-King said a few of the smaller companies had recently gone to the wall and that South British had benefited with two large accounts this year from clients seeking the

security of insuring with bigger companies. Present regulations require an insurance company here to have a paid up capital of only SHkIOM (SNZ2.I7M).

South British is the market leader in insuring Hong Kong’s large textile industries, while New Zealand Insurance operates independently, though in close association, in the field of short-term insurance with a large number of smaller clients.

“You could say we’re at the wholesale and they’re at the retail end of the market,” said Mr LennoxKing. Hong Kong was also seeing increased activity from international brokers moving into the market and driving premiums down by

competing with each other, he said. He likened the situation to that which caused bad over-capacity in the Australian market in recent years, contributing to the downturn of the insurance market there. South British had seen a considerable growth in business over the past eight years with increasing emphasis on large corporate clients. The company, traditionally associated with the textile industry since its emergence here, had benefited as those companies diversified into land and property development and as the industries themselves became increasingly capital intensive.

A drive by Indonesia in the late 1960 s and early 1970 s to develop its own

textile industry enabled Hone Kone manufacturers to sell old equipment there’ and invest in new, less labour-intensive plant which in turn drove the insured values of plant and equipment higher, said Mr Lennox-King.

Despite the effects of the recession in Hong Kong, South British increased its net underwriting result this year although total premium value was not up, he said.

Despite the downturn in land prices, South British was holding its profit up, he said. But he said the increasingly competitive activities of the international brokers, who were offering lower premiums and placing their business with London insurers rather

than in Hong Kong, was affecting the market. Mr Lennox-King said expansion could be expected in the area of life insurance in Hong Kong, although not necessarily by South British. Traditionally the Chinese had not taken out life insurance, believing it to be bad luck, he said, but attitudes were changing.

“I think with the increasing affluence of the middleclass Chinese here we could see a big development in the life insurance market.”