A unit of China’s Ping An Group has confirmed it is the insurer providing cover for the under-construction Kimpton Hotel in Hong Kong that was engulfed by a fire last week. Replying to an inquiry from the Post, Ping An Property & Casualty said it had reinsurance arrangements in place that reduce its exposure to only about a quarter of what is expected to be one of the biggest property-related damage claims the city has ever seen . The Kimpton Hotel is insured for a total of HK$2.63 billion (US$335.3 million), Ping An said. That includes HK$1.82 billion of “contractors’ all risks” insurance and HK$800 million of third party liability cover. “The company has attached great importance to the incident and immediately set up a special working group to launch any emergency services and claim follow-ups,” a spokesman for Ping An P&C said. The huge blaze started at around 11pm last Thursday night and took firefighters nine hours to extinguish . It was upgraded to a No 4 alarm fire on the city’s one-to-five scale of seriousness just before 2am on Friday. “Ping An P&C has made reinsurance arrangements for the insured building amount,” the spokesman said. Reinsurance is when an insurance company shares its premium income with reinsurance companies which will then also share the payouts when claims arise. As such, the total exposure of Ping An P&C in this case will be only 23.06 per cent of the claims made by Kimpton Hotel’s owner, or a maximum HK$606.94 million. The company is a unit of Shenzhen-headquartered Ping An Insurance Group, mainland China’s largest insurance company, founded by chairman Peter Ma Mingzhe in 1988. Empire Group, the developer of the hotel, did not respond to an inquiry from the Post about its insurance arrangements. However, it issued a public statement on Friday saying it was cooperating with “various investigations” by government departments and called on its main contractor, CR Construction Co, to manage the situation appropriately. The claim could run from HK$200 million to as much as HK$500 million (US$63.7 million) because the 42-storey hotel was 90 per cent built, which entitled it to a high level of compensation, according to Chan Kin-por, who represents the insurance industry in the Legislative Council. “The potential payout, which maybe as high as HK$500 million as estimated by insurers, is a huge sum of compensation. Even after reinsurance, the exposure for Ping An will remain high and hence it will be bad news for its share price,” said Kenny Ng Lai-yin, a strategist at Everbright Securities. However, Ng said the pain for the insurance giant will only last a couple of weeks. “As a leading insurance company, it is normal for Ping An to face huge claims from time to time, [though] it is not that common to have a huge fire at a skyscraper,” he said. “As long as Ping An has proper risk management in place, there will be no long-term negative impact to the company.” Shares of Ping An dropped 2.2 per cent on Monday to close at HK$55.95. Insurance companies contacted by the Post on Friday suggested Ping An may be hotel’s insurer. The Hong Kong authorities are currently checking the structural safety of the skyscraper and trying to ascertain whether scaffolding is at risk of collapse. When completed, the 340,000 square-foot Kimpton Hotel building will also house the historic Mariners’ Club. The hotel’s developer, Empire Group, was founded by the late Walter Kwok Ping-sheung, former chairman and chief executive of Sun Hung Kai Properties.