Losses for the insurer hit £178m in 2009 but the bank won’t need to offer further reserves
HSBC bank bosses ploughed another £103.5m into HSBC Insurance UK during run-off, as the stricken insurer racked up £178m losses last year, it emerged this week.
HSBC Bank injected the cash for reserves, claims handling costs and restructuring costs in December last year, latest accounts reveal. The figure is on top of the £110m pumped into the business before it was finally put into run-off in September last year.
Insurance Times understands HSBC Bank has drawn a line under the sand and is confident no more capital injections will be needed.
An HSBC spokesman said: “The published accounts for HSBC Insurance (UK) do show an overall loss of £178m for 2009. During the year, the decision was made to put the company into run-off and a new senior management team was put in place. As a result of these changes, there has been a complete review of business practices, which includes a quarterly external review of reserves.
“There has also been close and continuous monitoring by the FSA. HSBC remains committed to the decisions made in 2009 and the FSA is satisfied that management and control is now appropriate to the run-off status."
The revelation comes during a week in which the motor market suffered a fresh series of blows during the half-year results:
- Royal Bank of Scotland Insurance suffered a £253m operating loss. The bank-owned insurance business needed a £320m reserve release, of which £241m was for prior-year claims. Chief executive Paul Geddes warned that periodic payment orders – court orders for claims payments that can escalate over time – could cause more losses.
- Zurich’s UK gross written premium (GWP) dropped 3% during a year in which it increased personal lines motor rates 15% in an attempt to bring the book back into profitability. GWP fell from $1.44bn (£900m) in the first half of 2010, compared to $1.49bn in the same period last year.
- Head of Aviva UK general insurance, David McMillan, said there was “no sign of let up” in bodily injury claims inflation and he expected the trend to continue.