Among several local insurers under consideration, Wasit said Phatra was actively interested in Muang Thai Insurance.

It has, however, to date only been studying the possibility of merging with Muang Thai, and is leaving open its options to scout around for another local insurer with which to ally, he added.

"All we have done is review Muang Thai's balance sheet in the first half of the year. Mergers and acquisitions take time to complete, and the deal could collapse any time if both parties don't have a mutual agreement," said Wasit.

He insisted the company was still studying the possibilities and that any merger should be undertaken for the sake of economy of scale. Moreover, Phatra must be in control of management in a merged entity.

He said a merger with Muang Thai was possible but there were many factors to be examined.

"One of the key factors is that Muang Thai's shareholding structure has been changed. It is not the pure, Thai-owned company it once was," said Wasit, adding that the stake European insurance giant Fortis holds in the insurer represents a significant vote. This means the decision as to whether to merge with Phatra must also be approved by Fortis.

Fortis directly holds 25 per cent of Muang Thai. It also indirectly holds 40 per cent of Muang Thai Fortis Holding, which has a 74.49-per-cent stake in Muang Thai.

The rumour of a merger with Muang Thai made headlines early this year as both Phatra and Muang Thai are majority owned by members of the Lamsam family.

Phatra's core business is non-motor insurance, while Muang Thai's is motor insurance.

Muang Thai president Nualphan Lamsam is a member of the Democrat Party and she is likely to contest the next general election.

According to Insurance Department data, Phatra ranks third in total fire-insurance premiums among 75 firms in the local industry.

In the first half of the year, Phatra achieved Bt795 million in overall premiums, while Muang Thai received Bt2.18 billion.

Piyarat Setthasiriphaiboon

The Nation