Hong Kong’s insurance sector has been given a stable outlook by ratings agency Standard & Poor’s, although the firm warned that consolidation was likely in the territory's fragmented industry.
S&P observed that the local insurance market has been resilient amid the economic downturn and has survived intense competition, volatile markets and the outbreak of SARS in 2003.
Whilst ratings on local insurance firms are unlikely to come under downward pressure, S&P warned that smaller companies without a sustainable and defendable niche may be squeezed out.
“Perhaps the most obvious defect afflicting both sides of the broader industry in Hong Kong is the disparity between the larger and the smaller operators,” noted managing director Ian Thompson.
“Both the life and the non-life sectors in the territory are overcrowded and smaller companies that cannot find their own niche may find themselves pushed out of the market,” he observed.
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