Muang Thai Insurance is looking at acquiring portfolios from non-life insurers and selling non-life products to individuals in neighbouring countries as part of its plan to keep its premium income growing by 15 per cent annually in the next three to five
“The merger model was not suitable for us because tax incentives do not support insurance mergers. Therefore, we think that asset acquisitions should be the way to go to help support growth,” Puntrika Baingern, senior executive vice president and chief financial officer, said yesterday.
In the first half of this year, MTI improved its ranking from fifth to fourth place in the non-life industry by revving up its total premiums by 15.3 per cent to Bt4.76 billion.The company’s ambition was to be among the top four.
With the economy’s clear outlook, which will stoke insurance demand, MTI believes its premiums this year will achieve the growth target of 15-16 per cent to Bt10.35 billion, said Nualphan Lamsam, president and chief executive officer.
MTI’s first-half net profit was Bt474 million.
Growth in premiums of the non-life insurance industry in the second half is expected to be better than that in the first half, which was only 1 per cent. For the whole year, total premiums of the non-life industry are expected to expand by 4-5 per cent.
Puntrika said that under the three-to-five-year plan, the company would maintain its annual growth rate at 15 per cent, regarded as an aggressive target for MTI. The company is reviewing its business plan including adjusting its investment portfolio and sources of funds to prepare for expansion over the next few years.
MTI is conducting a stress test, as requested by the Insurance Commission. This can help tell the company if it can go ahead with its three-to-five-year business plan. The stress-test results will be submitted to the regulator by October.
The company is interested in expanding into personal-accident and motor insurance in Cambodia, Laos, Myanmar and Vietnam in tandem with Kasikornbank Group. Kasikornbank is opening a subsidiary in Laos this year and a branch in Cambodia next year. MTI aims to broaden its footprint in Laos and Cambodia, where is sees opportunities for motor and personal-accident insurance. The investment model for those countries might be joint ventures, but in some cases, MTI might consider setting up a representative office before a JV.
“In the first step, we have to help local partners in terms of technology and know-how because those regulators want foreign companies to help develop financial services more than to allow foreign companies to have full authority in joint ventures.