Column: Interview
“Bangkok Insurance Mergers and Acquisitions or M&A Policy There will always be opportunities, but if you are investing in a small company, it may not be worth it. The best way is to be a medium or higher company. And now we are interested in a company that has a portfolio in the field of insurance that is not mainly automobiles (Nonmotor),” announced the publication of “Chao Chai Sophonpanich,” Chairman of the Board of Directors of Bangkok Public Insurance Company Limited or BKI, who gave an interview Recent media reports indicate that the company is looking for opportunities to further expand its insurance portfolio in the future.
Insurance is entering the consolidation phase
“Chao Sua Chai” said that the trend of the general insurance business in Thailand in the next few years The number of companies should be reduced to about 25-30 companies from the current number of about 50 companies Total premium earned in the market is nearly 300 billion baht, with quite a few small companies. So, in the long run it will be difficult. If you don’t find a way to develop yourself to make money Because if you have a low income, it will be difficult to survive.
With various new regulations in the future, it will become even more difficult for non-life insurance companies to be quite large. to invest in people and technology systems Therefore, it is believed that there will be more mergers and acquisitions from now on. With the promotion of Office of Insurance Commission (OIC) policies that focus on strengthening insurance companies. and if the number of companies is less I think there will be more competition.
“Small and medium-sized companies will struggle to develop systems and employ people. Because these factors have high costs, for example actuaries. If you don’t have a regular job, you have to hire someone from outside (Outsource), whose salary is quite high. Therefore, when comparing income with expenses, there will be problems. But if it’s a big company, it’s an advantage. Because the capacity is greater. “
Foreigners aim to buy big companies
At the same time, in the eyes of foreign investors who are interested in investing in the general insurance business in Thailand, there is a high number. Now the goal of entry is Invest in the top 5 non-life insurance companies in the industry. Because they think that if it’s not big enough, it’s not worth investing in.
Because if you invest in a small company, you will have to invest in a system. Expand the work greatly which can cause a loss Because the price has to be cut to compete. Currently, there are foreign insurance companies in Thailand. About 12-15 companies are operating.
Interest in “Non Motor” M&A
For an M&A policy from Bangkok Insurance Company It is considered that it is always available if there is an opportunity. Initially, interested companies will be considered from the source of their insurance work. and profitable operations But if it’s a small company, it might not be worth it. Because the insurance premium portfolio has a small share The best way is to be a medium or higher company. Currently, we are interested in focusing on companies with non-motor insurance portfolios.
Looking at “Sin Mankhong”, the chance of survival is difficult.
Regarding the cause of the problem of Sin Mungkong Insurance Company Since the Office of the Insurance Commission has given the opportunity to rehabilitate its own business at this time, “Chao Sua Chai” said about this matter: It may be difficult to revive the business . Because there is tens of billions worth of Covid debt. And workers or personnel are gradually taken away by other companies to work.
“Actually, Sin Mungkong Insurance Company had previously come into contact with Bangkok Insurance Company and many other companies, and at that time it was interested in holding shares and providing financial support. The reason is that we have seen good management methods. The management of the insurance business also depends on the individual. But there is a condition that the Covid debt problem must be solved first. and come and start a new business But in the end, I couldn’t cope with it.”
Universal Insurance Fund Answer
“Jao Sua Chai” gives his perspective on the case where the General Insurance Fund (PWA) is facing liquidity problems. From the fact that there are 600,000 creditors of non-life insurance companies whose licenses have been revoked, with debts of more than 50 billion baht, it is said that there is now only one way to solve the problem. Increase contributions from non-life insurance companies to the fund When asked whether they agree to pay or not, they must answer that they have no choice. But initially it is expected that the business sector will have to object first.
Regarding the issue of whether insurance companies have to pay additional contributions or not, it will be passed on to consumers who have to pay higher premiums or not, “Chao Sua Chai” said it is unlikely, because there is competition already in the market. . If any company increases insurance premiums You will find that there are other companies willing to lower the competitive price.
Adjust your portfolio to delay investing in stocks
Regarding the picture of investment portfolio management, “Jao Sua Chai” said that he aims to maintain this year’s investment returns at a level of 2.7% from 2023. Bangkok Insurance Company It has an investment portfolio value (according to market price) is 52.9 billion baht, with a return on investment of 2.7%, but if the investment portfolio is valued (by cost price) it will be 29 billion baht, representing a return on investment of 5%, divided into It is investment portfolio: 1. Debt instruments (government bonds, private bonds, deposits) 65% share and 2. Stock market share 35%.
Currently, there is no policy to invest in Thai stocks because the SET index continues to fall. During this period, you may turn to investing in bonds. Because in the second half of 2023, bond interest rates rose higher than deposit interest rates.
which is when the deposit portfolio matures I have already moved the money to invest in bonds. And the rest of the year will depend on the direction of interest on bond deposits. which is known now Interest rates are going down. Therefore, under these assumptions the company will focus on investing in debt instruments with a longer maturity, or 3-5 years.
“According to the estimate of 2024-2025, the Thai economy will still be slow. This makes choosing an investment a lot of problems. Because we are still not sure what the future of the economy will be like. Most analysts expect Thailand’s GDP this year to expand by 2.7-2.8%, which is low compared to the past. and also evaluate It is not clear what type of business will grow clearly. So, right now, delay investing first. to wait and see the development of the economy,” said Chao Sua Chai.
For the 2024 target, the total premium income is set at 32,500 million baht, growing 8% compared to the same period last year. Divided into car insurance premiums of 13,600 million baht, this part comes from EV car premiums of 350 million baht (14,000 cars) and non-auto insurance premiums of another 18,900 million baht.
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