Participating Business Committee (PBC)

In accordance with the Insurance Authority's Guideline on Governance and Management of Fund(s) of Participating Business (GL34), HSBC Life (International) Limited ("the Company") has established a Participating Business Committee (the "Committee" or "PBC") to provide independent and objective advice to the Board of Directors (the "Board") in respect of the participating fund(s) which comprise participating business carried on in Hong Kong.

Composition and independence

In accordance with the Insurance Authority's GL34, the Company is required to ensure the PBC's composition meets the prescribed independence and competency expectations. Accordingly, at least half of the PBC members are independent of the Company and the Chairperson is an independent member. The PBC also includes members with an adequate spread of skills, knowledge and relevant experience to discharge its duties effectively, and the Board assesses and confirms members' independence having regard to GL34's independence criteria.

Role of the PBC

The PBC should operate independently and report directly to the Board. The Board should seek and consider advice from the PBC when making decisions on key matters related to the management of participating business.

Duties and responsibilities

The Company establishes clear terms of reference for the PBC setting out its role, responsibilities and procedures. In providing its advice, the PBC considers whether policyholders are being treated fairly, having regard to the rights and interests of different groups of policyholders. The PBC considers the following key matters, at a minimum, in advising the Board:

1. Benefit illustrations – whether the level of future discretionary benefits provided in the benefit illustration is clear, fair and reasonably achievable.
2. Allocation of distributable surplus/profits and dividends/bonuses – the policy and mechanism for allocation of distributable surplus/profits, the dividends/bonuses declaration mechanism (including any smoothing mechanisms) and the actual dividends/bonuses recommendation, taking into account reasonable expectations of policyholders, fairness and equity, and sustainability.
3. Expenses and charges – fairness, equity and reasonableness in allocation of expenses and charges to and within the participating fund(s).
4. Risk and investment profile – the risk and investment profile of the participating fund(s), including the appropriateness of the risk appetite and risk level taken, and the management and reasonable balance of risk and return.
5. Management actions – the impact of any management actions planned or implemented.
6. New business strategy – the strategy for future sales of insurance policies and their impact on the participating fund(s).
7. Shareholder capital support – the use, purpose and terms of any shareholder capital support to the participating fund(s).
8. Policyholder communications – communications with existing and potential policyholders relating to the participating fund(s), including fairness and transparency of disclosed information which may affect policyholders' decisions.
9. Other relevant matters – any other issues which the Company or the PBC considers appropriate in relation to the management of the participating fund(s).