Exclusive | Ping An liable for 23 per cent of Kimpton Hotel’s US$335 million fire damage as reinsurance cuts its risk
- Ping An Property & Casualty said it has reinsurance cover that cuts its exposure to claims arising from the Kimpton Hotel fire
- The claim could run from HK$200 million to HK$500 million, one of the largest of its kind in Hong Kong, according to an industry leader
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.
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.
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.
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.