INSURANCE / STRATEGY

Siam City expands via bank network

CHAROEN KITTIKANYA

Siam City Insurance, a subsidiary of Siam City Bank Plc, is set to aggressively expand sales through the bank channel this year and tap into the parent bank's existing customer base.

''We will get more aggressive in 2008 with the bank network,'' said Natdanai Indrasukhsri, president of Siam City Insurance. ''We are now preparing our infrastructure and products that fit the demand for different locations.''

Siam City Insurance began offering bancassurance two years ago, with simple products such as personal accident plans, small business coverage, compulsory motor insurance and home fire insurance.

However, the premiums earned from the bank channel remain small compared with earnings from brokers and agents.

According to Mr Natdanai, Siam City Insurance expected to end 2007 with direct premiums of 668-680 million baht, a rise of at least 20% from a year earlier, with profit of 48 million baht, up from 40 million in 2006.

The profit stemmed mostly from underwriting, particularly from fire insurance, the company's core business.

He said investment profit was marginal for the company, as a majority of the company's investments worth between 300 and 400 million baht were in bank deposits and bills of exchange.

''We concentrate mainly on expanding the company on an established and steady basis,'' said Mr Natdanai. ''Although our written premiums are not high compared with those of large companies, we have posted an operating profit throughout the years from just 15 million baht in 2003 when I have first joined this company.''

He attributed the company's profitability partially to its low exposure to high-risk motor insurance.

Motor insurance accounts for less than 20% of the company's premiums, and underwriting for the motor segment is undertaken with caution.

According to Mr Natdanai, Siam City Insurance projected its business to grow at least 20% in 2008 with direct premiums of about 720-750 million baht and profit of 52 million baht.

The growth prospect is foreseeable even though he was uncertain about the country's economy in 2008 .

''No matter which parties form the new government, they will encounter a daunting task, particularly for economic ministers to restore the confidence of local and international investors,'' said Mr Natdanai.

''The Thai economy would be prone to more risk if the economic ministers are not strong and competent enough to patch up economic problems that were left unsettled a year-and-a-half ago.''