The competition comes from Europe-based insurers who have recently established a presence in Hong Kong.

ECIC commissioner Thomas Yiu Kei-chung said with better economies of scale from their operations worldwide, these new players could offer cheaper insurance policies with similar breadth of coverage to those of ECIC.

The competition has prompted many manufacturers to request reductions in premium rates when they renew policies with ECIC.

Mr Yiu said ECIC would entertain these requests only on a case-by-case basis, according to the company's assessment of the payment default risks of individual policy buyers.

However, this flurry of price reduction requests lowered ECIC's average premium rate to 0.54 per cent of the insured amount from 0.55 per cent a year ago.

Mr Yiu said ECIC still welcomed competition because it believed it would heighten manufacturers' awareness about the importance of having a comprehensive export credit insurance coverage in managing their receivables.

This belief has proven to be correct. The market is now expanding and has brought in new business to ECIC.

Mr Yiu said the effect of a decline in ECIC's premium income, resulting from reduced rates, had been more than offset by the increase in business.

Each month, ECIC sees about 20 policies expire, but these are replaced by 50 to 60 new policies.

ECIC has about 2,300 policy-holders at present, up 200 from the end of last year.

During the four months from April to July, the company's insurance business amounted to $7.32 billion, up 10 per cent from the same period last year, mirroring stable growth in the manufacturing export sector.

Mr Yiu said the outlook for Hong Kong's export growth for the rest of the year was cautiously optimistic.

For the full year, he said ECIC could achieve an income of about $23 billion from its insurance business, up from $21.5 billion reported last year.

INSURANCE