The after tax profit for 2005 was Lm1.96 million. This was due to better cost control, increased sales, improved investment returns and reinsurance.

In 2005, the company reported a healthy increase in sales of 16 per cent in core protection and regular savings, when measured by annualised premiums, primarily due to more competitive pricing and increased marketing.

A strong investment performance on “With-Profits” business in 2005 enabled HSBC Life to declare a bonus rate in advance of 4.5 per cent for 2006, up from four per cent in 2005, an increase of 12.5 per cent. Richard Reid, managing director, stated: “We believe that this new bonus rate is attractive, particularly when one considers that under current tax regulations this bonus is free of tax in the hands of the policyholder.”

The investment strategy of HSBC Life is to hold a diversified range of assets to strike the right balance between providing attractive income and bonus rates and also capital protection and growth. The fund invests savings premium in a wide range of asset classes, including local and overseas equities, property, investment grade bonds, both local and foreign and cash. The company’s policy is to “smooth” returns over the term of the “With-Profits” policy so that periods of good returns, such as 2005, are balanced against the prospect of potentially lower returns in other years.

At the end of 2005, the level of free assets stood at Lm8.7 million showing an excess of Lm4.7 million over the statutory solvency margin of Lm4.0 million. Technical reserves have increased to Lm88.8 million from Lm66.0 million at the end of 2004 reflecting the continued strong growth in business over the year.

The company expects to continue its growth during 2006, leveraging the excellent financial planning capabilities of HSBC and the increased focus on the need for protection and long-term savings. Pension reforms present opportunities as well as challenges for the company and preparing for these reforms will represent a key initiative in 2006.