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SCMP Reporter

The Swire Group is to end its long history as an operator in insurance underwriting, continuing a pattern of cutting its stakes in various businesses.

  Under the terms of the deal, the listed Swire Pacific will sell its 49 per cent stake in Taikoo Royal Insurance to the Sun Alliance Group.

  Alliance will merge Taikoo Royal with its own Hong Kong subsidiary to form one of Hong Kong's largest general insurance operations.

  A second deal will see Swire Insurance Holdings sold to Zurich Insurance. Swire Insurance is made up of a range of agency operations as well as minority interests in Wing Hang Swire Insurance and Zurich Insurance Co Asia.

  Zurich also will take a majority interest in Paofoong Insurance from Swire Pacific. The remainder of Swire's shareholding in Paofoong will be sold to its existing joint-venture partner, the Shanghai Commercial Bank.

  The transactions are subject to the approval of the Hong Kong Insurance Authority, and the boards of the companies involved.

  The deals follow the announcement last April that Swire was reducing its stakes in Cathay Pacific Airways and Hong Kong Dragon Airlines (Dragonair).

  Swire Pacific executive director James Hughes-Hallett said the moves reflected the decision to streamline Swire's operations.

  '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,' he said.

  Mr Hughes-Hallett said the insurance industry had 'matured into a sophisticated and highly specialised business with some very dedicated players in the field'.

  'Whilst there were benefits in 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,' he said.

  In these circumstances, it had been decided the group would leave insurance underwriting, although it would continue in insurance broking, he said.

  The Swire Group first went into underwriting to service the needs of its shipping and trading activities.

  It was not intended that it would grow into a key activity, although Mr Hughes-Hallett said it had grown into a sizeable operation.



Swire Group quits insurance underwriting