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1、 MGT382- 1 -HIH Insurance bankruptcy caseContentsThe situation of HIH. - 3 - MGT382- 2 -1. Introduction. - 3 -2. Data analysis - 3 -2.1 The evolution of HIH. 3 - 2.2 The share of HIH in half of 2000 - 4 -2.3 The balance sheet of HIH (1999-2000) - 5 - 3 .Company strategic issues - 5 -3.1 Strategy mak
2、ing and execution - 6 - 3.2 Rapid expansion. - 7 -3.3 Top managers ability - 7 -4. Company operation - 8 -4.1Reinsurance. -8 -4.2 Risk management - 8 -4.3 Financial operation. - 9 - Summary. - 9 -Reference. - 10 - The situation of HIH MGT382- 3 -1. Introduction:The HIH was established in 1969, after
3、 struggle 20 years it gone public. Because of HIH is influential in Australia insurance market, its stock increase in front of Australia stock market. success in the capital market let it get massive funds to develop the oversea market.March 15, 2001, the High Court of Australia New South Wales New
4、South Wales (NSW). Place ordered to HIH and its 17 subsidiary companies in Australia, local provisional liquidation, and specify the KPMG Consulting firm (KPMG)Tony McGrath, Mr. and Alex Macintosh, Mr. provisional liquidator.After a preliminary investigation found that the carrying amount of HIH los
5、ses as high as $ 800 million, plus possible outstanding claims and potential recourse, even if the more optimistic estimates, actual total loss may be as high as $ 36-53 billion. Convinced HIH insolvent circumstances, the High Court of Australia officially announced on May 17, 2001 HIH bankruptcy, t
6、his is the following Reinsurance Australia, GIO Australia, the New Cap Re three of the company went bankrupt, the Australian insurance industry suffered another heavy blow, at the same time the largest bankruptcy cases in the HIH is Australias history.2. Data analysis2.1 The evolution of HIH1968, a
7、man named Raymond of Reginald Williams, who founded a major agent of Lloyds of London (Lloyds) underwriting underwriting agency that the MW of Payne, underwriting agency. In the next 32 years, the company through a series of mergers and acquisitions and convertible equity process, the premium income
8、 and total assets are increasing, and developed into one of 29 companies as the main body, a total of more than 250 companies, including the huge insurance Group (its structure as shown in Figure 1), Australias second largest non-life insurance companies. In 32 years time, Mr. Williams has been the
9、senior management of HIH, presided over the companys business. Mr. Williams because of serious differences in the Pacific, the MGT382- 4 -Eagle Equities and other issues with shareholders and until a few months before the company went bankrupt in October 2000, resigned as chief executive officer.Fig
10、ure 1: the HIH Insurance Group structure (Source: KPMG)2.2 The share of HIH in half of 2000A series of blows to HIH share price plummeted from the start of the second half of 2000, the HIH share price fell from $ 1 to around A $ 0.3 (see Figure 2). In addition, there are 1000 HIH employees lost work
11、, they may or policyholders and shareholders, the HIH bankruptcy will change their destiny.Figure 2: the HIH share price chart (Source: www. .au)2.3 The balance sheet of HIH (1999-2000)Table 1 shows the HIH as a listed companys balance sheet (1999-2000), the table is taken MGT382- 5 -from the HIH au
12、dit by Arthur Andersens 2000 annual report to regulatory agencies, audit material, is now sufficient evidence that the large number of falsestatements and records.1999 2000 1999 2000cash assets 638,700 461,600Dont earn premium reserve 1,038,900 1,069,400Short-term receivables 1,498,900 2,081,500outs
13、tanding loss reserve 1,415,500 1,423,400current investment 1,485,200 882,400Accounting period cope with 623,900 381,000Other current assets 693,800 25,000 borrowing 164,500 19,600Total Current Assets 4,316,600 3,450,500Drawing expense in advance 46,300 83,700Total Other Current Liabilities 3,289,100
14、 3,026,300Long-term account receivable 35,000 1,388,900permanent investment 1,189,000 1,753,100outstanding loss reserve 2,284,000 3,007,500fixed assets 147,800 164,600 term debts 335,800 504,400Other noncurrent assets 2,037,000 738,800 accrued expenses 6,000 4,100Non-current assets total 3,408,800 4,045,400Other noncurrent liabilities - -Total assets 7,725,400 7,495,90
