AIA says 'fear of the unknown' is the biggest challenge this year
American International Assurance (Thailand), or AIA, says fear of the unknown is the biggest challenge to its business this year, including unclear definitions and unknown details in both the amended Foreign Business Act and the Insurance Act.
Executive vice president and general manager Thomas White said insurance is not in Annex 3 and also doesn't fit in Annexes 1 or 2. "So, it has yet [to become] clear. The challenge this year is the fear of the unknown. However, I think everything might be okay." The draft insurance bill is under scrutiny by the Council of State. Last week, the Cabinet approved a definition of "dominator" as it applies to markets under the Competition Act, in a bid to prevent monopolies and unfair trading practices. White said AIA, which enjoys a 46.7 per cent of the life-insurance market, would not be affected by the law. "Every one of our products must be approved by the Insurance Department. This includes the price and the quality of the product," said AIA senior vice president Sutti Rajitrangson. "So it's impossible for us to control prices or join with the other top two insurers to monopolise the industry." White said he would meet Insurance Department director-general Chantra Purnariksha next Monday to discuss the department's demand that each insurer must submit to credit ratings this year. "We'll be happy to submit to credit ratings," he said. "We have no problem at all about doing that separately from the credit ratings assigned to our mother company." The insurer will also ask the department for approval to invest more money offshore. Last year, AIA was given approval to place Bt12 billion of its investment portfolio in foreign investments. It hopes almost to double that this year. "Around 80 per cent of our investment portfolio is in government bonds, with 10 per cent in equities and the rest in corporate bonds and real estate. We'd like to diversify our investment, in order to receive higher yields for the benefit of our policyholders," White said. If approved, the funds would be invested in foreign-government bonds and real estate. He said AIA expected to maintain its policy of investing 10 per cent of its portfolio in equities. The value of the company's equity investments dropped to just 7 per cent on December 19 after the Bank of Thailand announced its drastic 30-per-cent reserve-requirement measure. However, AIA's investment supervisor had shopped around for more low-priced securities to top up its portfolio. AIA posted 4.2-per-cent growth to Bt66.85 billion in total premiums last year. It has targeted 8-per-cent growth this year. Piyarat Setthasiriphaiboon The Nation
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