Taiping Insurance Shares Dip Following Hong Kong Apartment Fire
Shares of China Taiping Insurance Holdings experienced a significant drop on Thursday,November 27,falling as much as 8% due to concerns over potential financial exposure related to a devastating fire in Hong Kong. The fire, which occurred at the Wang Fuk Court apartment complex in Tai Po, has resulted in at least 55 confirmed fatalities with nearly 300 people still unaccounted for.
The Wang Fuk Court complex houses over 4,600 residents in 2,000 apartments across eight blocks,highlighting the city’s ongoing challenges with affordable housing.While shares partially recovered to close down 1.92%,underperforming the Hang Seng Index’s 0.1% gain, they had earlier fallen 8.1% to their lowest point since October 24.
According to publicly available records, residents of Wang Fuk Court approved a continuation of insurance coverage with china Taiping Insurance (Hong Kong) in December 2024.This policy, effective January 1, 2025, thru December 31, 2026, potentially exposes the insurer to up to HK$2 billion (approximately $257 million USD) in claims related to damage to the complex’s exterior and public areas.
Further complicating matters, China Taiping’s Hong Kong unit also insured the recent renovation project undertaken at Wang fuk Court. A project briefing document reveals a three-year policy, beginning in July 2024, providing “all risks” coverage to contractor Prestige Construction and Engineering Company for HK$365 million, alongside HK$200 million in “employees’ compensation” per event.
Authorities have identified Prestige Construction and Engineering Company as the registered contractor for the building. Repeated attempts by Reuters to reach Prestige for comment were unsuccessful.
A source familiar with the situation confirmed that the Hong Kong unit insured all risks associated with the renovation and provided employee compensation coverage for the contractors. Additional coverage included third-party liability for the owner corporation, property insurance, and public liability insurance.
Analysts at Citigroup suggest the fire could substantially impact the underwriting results of Hong Kong’s general insurance industry, noting that property insurance gross premiums totaled HK$15 billion ($1.93 billion USD) in Hong Kong in 2023.
The Hong Kong Insurance Authority has established a task force, led by senior management, to work with insurers and ensure sufficient resources are allocated to handle inquiries and claims.
Firefighters have extinguished flames in four of the seven affected blocks, bringing the remaining fires under control more than 24 hours after the blaze began. Police investigations suggest the fire may have been caused by negligence and the use of unsafe materials by the construction firm.
($1=7.7767 Hong Kong dollars)
