Company: HBCYF
Filing Date: 2025-02-20
Form Type: 20-F
Source: 0001089113-25-000040
Chunk: 367

Company: HSBC HOLDINGS PLC
Filing Date: 2025-02-20
Form: 20-F
Chunk 367
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. In addition, in some scenarios the asset returns can become insufficient to cover the policyholders’ financial guarantees, and some contracts are non-participating, in which case the shortfall has to be met by HSBC. Amounts are held against the cost of such positions, calculated by stochastic modelling in the larger entities. The cost of such guarantees are generally not material and are absorbed by the insurance fulfilment cash flows. For unit-linked contracts, market risk is substantially borne by the policyholder, but some market risk exposure typically remains, as fees earned are related to the market value of the linked assets. Sensitivities The following table provides the impacts on the CSM, profit after tax and equity of our insurance manufacturing subsidiaries from reasonably possible effects of changes in selected interest rate, credit spread, equity price, growth assets and foreign exchange rate scenarios for the year. These sensitivities are prepared in accordance with current IFRS Accounting Standards and are based on changing one assumption at a time with other variables being held constant, recognising that in practice such variables could be correlated. Due in part to the impact of the cost of guarantees and hedging strategies which may be in place, the relationship between the CSM, profit after tax and total equity and the risk factors is non-linear. Therefore, the results disclosed should not be extrapolated to measure sensitivities to different levels of stress. For the same reason, the impact of the stress is not necessarily symmetrical on the upside and downside. The sensitivities are stated before allowance for management actions, which may mitigate the effect of changes in the market environment. The method used for deriving sensitivity information and significant market risk factors remain unchanged except for updates made to the foreign exchange rate risk methodology, which now limits the impacts to within more recent historical ranges. 2023 comparative sensitivities have been updated to reflect this change. The sensitivities provided below include the French insurance business, which was classified as held for sale at 31 December 2024. Further details are provided on page 433 .

| 264 | HSBC Holdings plcAnnual Report on Form 20-F |

Risk review

| Sensitivity of HSBC’s insurance manufacturing subsidiaries to market risk factors |              |                            |                       |              |                            |                       |
| (Audited)                                                                         |              |                            |                       |              |                            |                       |
|                                                                                   |         2024 |                            |                       |         2023 |                            |                       |
|                                                                                   | Effect onCSM | Effect on profitafter tax1 |