Thanasin Insurance expects to pay off Bt400 million in pending claims after the selection of a new CEO and executives is completed this week.

The insurer reported that its management team is now selecting the new executives who will draft a rehabilitation plan, accounting details and financial-status report for the Insurance Department to consider before its deadline.

Earlier, the Insurance Department warned the cash-strapped small insurer to increase its capital to end its liquidity crisis. Following months of ignoring the order, the Insurance Department on Wednesday suspended the insurer from selling policies.

The department also ordered the firm to submit a restructuring plan and pay about Bt400 million in delayed claims by the end of this month. The company's licence has not been revoked, however.

Thanasin had Bt555 million in outstanding policies as of 2005, according to the department. Total assets were Bt234 million. Claims totalled Bt550 million and other liabilities were Bt88 million.

Thanasin needs to increase capital by Bt405 million to meet requirements. The firm reportedly owes mechanics and bodywork professionals around the country between Bt300 million and Bt400 million.

The Insurance Act requires non-life insurers to maintain 10 per cent of premiums - or a minimum of Bt30 million - in insurance funds. Life insurance companies must keep 2 per cent - but no less then Bt50 million - in the funds.

Early in 2004, Thanasin (then known as Patchara Insurance) was among five non-life insurers the Insurance Department issued warnings to. The other four were Commercial Insurance, Sampanh Insurance, Road Accident Victims Protection and Union Prospers Insurance.

Thanasin earlier was owned by the Lapvisuthisin family, which had also owned Picnic Corp, a cooking-gas distributor that went bankrupt.

The department is now looking at two other non-life insurers with liquidity problems that have failed to maintain 10 per cent of total premiums in insurance funds, it said.

Department director-general Chantra Purnariksha said there was no cause for concern among Thailand's 68 general insurers and 24 life insurers.

Companies with liquidity shortages account for just 4 per cent of the total, she said, adding the department had the matter under control.

In July 2005, then-commerce minister Thanong Bidaya ordered Commercial Insurance to shut down after it failed to submit a rehabilitation plan that was required by the Insurance Department.

Although Commercial Insurance has been shut for almost two years, its executives have not been charged. In late 1999 Rattanakosin Insurance had similar problems and was shut down.