Merged entity aims to be top performer

Business News : Monday December 10, 2007

INSURANCE / STRATEGY

Merged entity aims to be top performer

CHAROEN KITTIKANYA

The new entity formed from the merger between SET-listed Phatra Insurance (PHA) and unlisted Muang Thai Insurance (MTI), aims to become one of the top five insurers in the industry, with written premiums of at least five billion baht over the next two years.

MTI president Nualphan Lamsam said the projected five-billion-baht premiums would be equally contributed by the motor and non-motor insurance portfolio.

Non-motor sources, notably fire insurance premiums, are PHA's main revenue source while MTI's income is predominantly from auto insurance premiums.

MTI last year reported written premiums of 1.89 billion baht, with motor insurance contributing 1.13 billion, and non-motor 760.7 million.

Of non-motor insurance premiums, 215.3 million baht came from fire insurance, 53.9 million from marine transport and 491.4 million baht from miscellaneous insurance.

According to Mrs Nualphan, for 11 months of this year the company reported written premiums of 1.8 billion baht, up 15% from the same period last year.

MTI targets its written premiums to grow to at least two billion baht by year-end. PHA projects 20% growth, from 1.39 billion baht last year. Next year, Mrs Nualphan predicts MTI's business alone will grow by at least 15%.

She believes the growth of the merged firm would exceed 15% after completion by the second quarter of next year,

PHA and MTI, two non-life insurers controlled by the Lamsam family, announced a merger in June of this year to position itself in the competitive insurance business. With approximately 74 non-life insurance companies in the Thai market, the company anticipates that future competition will be more intense. On top of that, regulatory policy is shifting toward a risk-based capital management approach. The policy would benefit large companies and encourage mergers.

The PHA-MTI merger process will begin next March and is expected to be completed in April.

PHA is 40% held by the Lamsam family, and has paid-up capital of 200 million baht and a par value of 10 baht per share. MTI is 50% held by the family, with another 25% held by Belgium's Fortis, and has paid-up capital of 390 million. Kasikornbank controls 7.5% of Muang Thai and another 9% of Phatra.

The new company would have capital of 590 million baht, with a par value of 10 baht per share.

The Lamsam family will control about 40% of the new firm; Kasikornbank 7%, Fortis 11-13%, retail investors 25% and other investors 15%.

PHA shares would continue to trade until the merger in March. Afterward the shares would be suspended for five to seven days until the process is completed.

According to Mrs Nualphan, the new company expected to operate under Muang Thai Insurance Plc to make it compliant with Muang Thai Life Assurance whose brand is much more established among local consumers. The shares would be traded instead on the Stock Exchange of Thailand.

''We (the new entity) are now ranked No. 7 in the industry, but we strongly believe we can become one of the five leading insurers over the next two years given our more diversified portfolio,'' she said.

By : Bangkok Post