Muang Thai Life Assurance will set aside up to Bt500 million to invest in Thai shares if the stocks proposed match its equity investment policy, senior executive vice president Pakineenard Tiyachate said last week.

Vichate Tantiwanich, chairman of the Market for Alternative Investment's (MAI) advisory committee, said recently he would meet with Thai Life Assurance, Muang Thai Life Assurance and Bangkok Insurance to persuade them to invest in 18 stocks that have good fundamentals and offer high yields.

The companies are listed on either the MAI or the Stock Exchange of Thailand. The three insurers account for about 60 per cent of the total equity investment portfolio of the insurance industry.

Pakineenard said the board would make a decision in March after his meeting with Vichate later this month.

"We have the funds to invest, but we are not in any rush. We have to let our research team take a close look at the data of any company whose stock we might be interested in buying," she said.

She added that to meet Muang Thai's investment policy, a company must have good fundamentals and offer a high yield as well as sufficient trading liquidity.

Muang Thai last year had Bt41.89 billion in its investment portfolio. Bt4.64 billion or 11.07 per cent was  in equities, while Bt33.736 billion was invested in fixed income funds and Bt3.52 billion was allocated for mortgages and policy payments.

Last year, its investments generated a return of 5.4 per cent. This is expected to rise to 5.5 per cent or Bt2.13 billion this year.

"This year, we will have additional cash flow from first-year premiums to top up our investment portfolio," Pakineenard said.

She said that the sharp market pullback in December - known as Black Tuesday - had sliced about Bt50 million of the value of the company's investment portfolio.

Due to low interest rates, the firm will be looking for more investment vehicles. It has already bought into some property funds and unit trusts and is looking for a good deal from structured-note products. These are derivatives that change in value with movements of an underlying index, or notes whose issuers make swap arrangements to alter the required cash flow.

Last year, the firm obtained a 6-per-cent return from this tool on an investment of Bt2 billion.

Meanwhile, Muang Thai Life president Sara Lamsam said that raising its shareholding in Phatra Leasing from 6.71 per cent to 14.67 per cent last month, which made the insurer the biggest shareholder, was a significant move in terms of expanding its future business.

The firm already has Kasikorn Leasing as an affiliate, but Sara said the businesses could run without having any conflict of interest.

"Kasikornbank disposed of its stake in Phatra Leasing to us because it already has Kasikorn Leasing, which focuses on retail consumers. We have dealings with Kasikorn but the acquisition of Phatra Leasing's shares will help us expand into corporate business," he said.

Speaking as president of the Thai Life Assurance Association, Sara said the association would submit a proposal to the Insurance Department this month, asking the agency to increase the tax relief incentive from Bt50,000 to Bt300,000.

Siriporn Chanjindamanee,

Piyarat Setthasiriphaiboon

The Nation