The Hong Kong Export Credit Insurance Corporation (HKECIC) underwrote total insured business of HK$120,244m ($15,510m) during the financial year ended 31 March 2020 (FY2020), representing a decrease of HK$30,670m or 20.3% over the previous year.
In releasing its latest annual report, the HKECIC said that it recorded a decrease of HK$43.53m (or 13.6%) in revenue to HK$277.48m and a loss of HK$104.58m, compared to a loss of HK$14.12m recorded for the previous year.
The loss was the combined result of an underwriting loss of HK$110.70m (compared to an underwriting loss of HK$64.29m in the previous year) and investment income of HK$6.12m (compared to investment income of HK$50.17m in the previous year).
Commenting on the FY2020 results, Mr Ralph Lai, Commissioner of the HKECIC, said, “This year is the second year in a row seeing an exceptionally high level of gross claims. After the large payment difficulties cases in 2017-18, the trend in fact remained stable throughout 2018-19 and into 2019-20 for the most part.”
However, towards the end of 2019-20, the HKECIC received large payment difficulties cases on a defaulting buyer in mainland China whose tight liquidity was exacerbated by the precarious external environment.
A key factor enabling the corporation to reduce the volatility in its underwriting results was its reinsurance arrangement, which has been adopted as an effective and critical risk mitigation strategy over the years.
Mainland China continued to be the HKECIC’s largest insured market, accounting for 41.8% of its total insured business, followed by the US and the UK.