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Contingency plan buoys Sri Ayudhya Capital

SRI AYUDHYA CAPITAL is confident it can produce double-digit growth in revenue and profit for the next three years, as - thanks to its well-prepared contingency plan - it is well protected from the toll the political situation has inflicted on the insurance industry.

"The growth of the insurance business this year is largely dependent on the longevity of the political situation and how much it affects gross domestic product and consumer demand," Rowan D'Arcy, president and chief executive officer, said yesterday.

Sri Ayudhya expects demand for insurance products to continue on its downtrend since November. However, because of its successful investment plan and corporate strategy, as manifested by its achieving 521-per-cent growth in net profit from Bt94.94 million in 2012 to Bt589.94 million in 2013, it believes it can sustain double-digit earnings growth into the future.

Since insurance is a consumer product, if consumer confidence is low because of the political uncertainty, demand for insurance will also be lower.

Because of the lower demand, the insurance business will slow to growth of 15 per cent for the life segment and 5-8 per cent for non-life this year, the company believes.

The Thai Life Assurance Association has reported that life-insurance premiums rose 17.3 per cent to Bt459.1 billion last year, while the Insurance Commission has revealed that non-life premiums advanced 16 per cent to Bt660 billion.

Despite the current situation, Sri Ayudhya says it remains optimistic because its business-continuity plan is robust and its expansion plan for its product line and distribution channels is on track. It will recruit more brokers and agents to tap into demand from their existing customers.

This year the company will concentrate on miscellaneous insurance, as it sees good growth potential in this business. and on substantial distributional of quality, especially for Car insurance accounted for 35 per cent of its revenue from the miscellaneous segment.

Managing director Chusak Salee said the company had nearly Bt6 billion to invest in the insurance industry. The company's total revenue moved up 11.6 per cent to Bt1.91 billion last year from Bt1.71 billion in the previous year.

The impressive financial performance in 2013 was largely due to significant improvement in all of the company's three core assets - wholly owned subsidiary Sri Ayudhya General Insurance, a non-life insurer, 20-per-cent-owned Allianz Ayudhya, and non-insurance assets.

Sri Ayudhya General has recovered well from the floods in 2011 and improved further last year, when it contributed about 25 per cent of the parent's total profits.

D'Arcy said the most significant contribution, which accounted for more than half of net profit, was from Allianz Ayudhya.

"We made a strategic decision to raise our holding in Allianz Ayudhya from 5 per cent to 20 per cent in 2012, and that investment started to pay off last year," he said.

The other non-insurance assets were responsible for roughly 20 per cent of Sri Ayudhya's total profit last year. Chusak said the company had recently approved the sale of its shares in Sunrise Equity Co to Great Luck Co and Great Fortune Co and expected to gain Bt1 billion.


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