[HONG KONG] Shares of China Taiping Insurance Holdings fell as much as 8 per cent on Thursday (Nov 27) on concerns about its coverage exposure of more than US$200 million to a Hong Kong apartment complex where a huge fire killed at least 55 people, with nearly 300 missing.
The tightly packed Wang Fuk Court in the Asian financial hub’s northern district of Tai Po has 2,000 apartments across eight blocks that are home to more than 4,600 people in a city struggling with chronic shortages of affordable housing.
Shares of state-owned China Taiping Insurance closed down 1.92 per cent, lagging a gain of 0.1 per cent in the benchmark Hang Seng Index, recovering from earlier losses of as much as 8.1 per cent that drove them to their lowest since Oct 24.
Publicly available minutes of meetings of registered owners of Wang Fuk Court showed members approved the continuation of insurance coverage for the housing complex with China Taiping Insurance (Hong Kong) in December 2024.
The policy period runs from Jan 1, 2025, to Dec 31, 2026, the records show, exposing the insurer to liability of up to HK$2 billion (S$330 million) in compensation for damage to the complex’s exterior and public area.
The Hong Kong unit also provided insurance coverage for the year-old renovation project to the contractor, Prestige Construction and Engineering Company, a separate publicly available project-briefing document showed.
The policy, valid for three years from July 2024, covers “all risks” for the contractor with a total of HK$365 million in compensation, as well as “employees’ compensation” of up to HK$200 million per event.
On Thursday the government identified Prestige as the registered contractor for the building complex. Prestige did not answer repeated calls from Reuters to seek comment.
China Taiping Insurance Holdings, which provides general insurance services ranging from marine hull to property, and its Hong Kong unit did not immediately respond to Reuters requests for comment.
A source with knowledge of the matter said the Hong Kong unit insured all risks related to the renovation project and provided coverage for the contractors’ employee compensation.
The insurer also covered third party liability of Wang Fuk Court’s owner corporation, property insurance, and public liability insurance.
The fire could substantially hurt the underwriting results of Hong Kong’s general insurance industry, Citigroup analysts wrote on Thursday.
In 2023, property insurance gross premiums amounted to HK$15 billion in Hong Kong, they said in a research note, citing data from the city’s insurance regulator.
In a statement, the Hong Kong Insurance Authority said its senior management was leading a task force working with relevant insurers to ensure that the industry deploys adequate resources to handle enquiries and claims.
Authorities said they had doused the flames in four of seven affected blocks, with those in the rest brought under control more than 24 hours after the blaze started.
The fire may have been caused by a “grossly negligent” construction firm using unsafe materials, police said. REUTERS
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