17th January 1997
For immediate release
17th January 1997
Swire Pacific Ltd. today (17th January) announced
plans to rationalise its local underwriting businesses.
Swire Pacific will sell its 49% stake in Taikoo
Royal Insurance to the Royal SunAlliance Group which will merge
Taikoo Royal with Sun Alliance Hong Kong Branch to form one of
the largest non-life insurance operations in the territory.
Swire Insurance Holdings, comprising various
agency operations and minority interests in Wing Hang Swire Insurance
and Zurich Insurance Co. (Asia), will be sold to Zurich Insurance.
Zurich Insurance will also acquire a majority interest in Paofoong
Insurance from Swire Pacific. The balance of Swire Pacific's
Paofoong shareholding will be sold to its existing joint venture
partner, the Shanghai Commercial Bank. All these transactions
are subject to approvals by the Hong Kong Insurance Authority
and relevant boards.
Mr James Hughes-Hallett, Executive Director
of Swire Pacific, said that this strategic decision was taken
to improve Swire Pacific's focus of activity.
Mr Hughes-Hallett explained, "The Swire
Group first went into underwriting to service the needs of its
shipping and trading activities in the Far East in its early days.
It was not intended as a major business of the Group, although
it has grown into a sizeable operation in association with some
of the most established and respected insurance companies in the
market place, in particular Royal Insurance, Zurich Insurance,
Sumitomo, Dowa and others. Nevertheless, the rapid growth of
other businesses within the Swire Pacific group has meant that
underwriting now represents an extremely small percentage of the
group's turnover and operating profit.
"Over the years, the insurance industry
has matured into a sophisticated and highly specialised business
with some very dedicated players in the field. Whilst there were
benefits of having our own underwriting companies to look after
our insurance needs, a significant injection of new funds and
management is required to remain at the forefront of the industry.
Under these circumstances and in view of other priorities, it
has been decided that the Group ceases to be actively involved
in insurance underwriting, but will remain in the insurance broking
business."
Mr Hughes-Hallett added that arrangements are
in place to ensure that clients' interests will not be affected
and that they will continue to receive the existing high level
of service and expertise.
"Our insurance interests will be acquired
by partners who are experts in the industry," he said. "We
are very comfortable in the knowledge that staff in our underwriting
operations will be transferring to such excellent companies as
Royal SunAlliance and Zurich Insurance, with whom we, in any case,
expect to have a long association as insurers in the future."
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