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Published on January 19, 2008

Half a world away in Toronto, Ontario, Hamblin Watsa Investment Counsel provides investment management to the insurance, reinsurance and runoff subsidiaries of New York Stock Exchange-listed Fairfax Financial Holdings, which owns 25 per cent of the local insurance company.

The year-old insurer has half of its Bt290 million investment assets in equities, some of which are with managed funds, and the remainder in bonds and savings, Sopa Kanjanarintr, chief financial officer, said yesterday.

Hamblin Watsa will pick the mostly big-cap stocks and set an overall strategy, and the Thai operation will execute it.

"We still manage cash flow though," she said.

The portfolio returns around 5 per cent.

The company has a loss ratio of about 30 per cent.

Except for investment management, Falcon Insurance, which has Navakij Insurance as a 30-per-cent owner, has full autonomy in running day-to-day operations and has been focusing on growing its three main distribution channels, bancassurance, insurance brokerage and direct marketing.

CEO Oran Vongsuraphichet said Falcon, which mainly sells motor and personal-accident policies, aims to taste its first net profits by next year.

It took in about Bt100 million of total premiums last year, and Oran wants to more than double that to Bt280 million this year.

In the next two years, its bancassurance business, mostly involving mortgage insurance products, has TMB Bank and Government Savings Bank as its main outlets.

But along with the brokerage channel, it will make room for direct marketing as it tries to be more independent from agencies. Still, Oran would like to see more business with international and regional brokers.

The bancassurance and brokerage channels generate more than 80 per cent of the firm's total premiums.

Falcon is looking to further expand direct marketing in the Northeast, setting up claim centres in Khon Khaen, Ubon Ratchathani and Udon Thani, where it sees room for personal assurance products.

With a new insurance law soon to be implemented, Oran believes that consolidation will become inevitable for small and medium-sized firms.

He does not rule out merging with a similar-sized insurer, but he would make sure that the counterpart had a direct-marketing strategy.

Ki Nan Tsui

The Nation