The Independent in London reports HSBC (HBC) plans to cut costs and boost revenues by managing more insurance risk on its own books instead of relying as heavily on reinsurers, who the company determined are not as financially strong as the bank itself, given its "scale and diversity." HSBC estimates up to $40M in cost savings by the end of 2009 from retaining more group premiums through its Bermuda-based captive insurance company. In addition, HSBC sees an opportunity to generate hundreds of millions of dollars in revenues within three to five years by utilizing its Dublin-based reinsurance arm. Clive Bannister, group managing director of insurance at HSBC: "In the old days, you had two ways of getting rid of risk: you didn't write it or you reinsured it. We are now retaining more risk in two places." Mr. Bannister said the bank's strategic partners will include AIG (NYSE:AIG), Zurich (OTC:ZFSVY) and Aviva . HSBC had over 100 insurance suppliers until recently. HSBC's ordinary shares were last up 0.3% to 853.00 pence in morning trading. ADRs of HSBC gained 1.6% to $84.64 on Friday.
Additional Reading: HSBC to Move SIVs to Balance Sheet, Provide $35B in Funding
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