February 20, 2014 00:00 By
FALCON INSURANCE aims for 15-per-cent growth in 2014, after announcing its second "Best of the Best Year" in a row.
Falcon, a non-life insurance company, has announced a target for gross written premiums of Bt1.7 billion, a 15-per-cent increase from 2013. The aim is to earn 80 per cent of revenue from corporate customers, as opposed to 74 per cent last year.
In 2013, Falcon Insurance brought in Bt1.481 billion in gross written premiums, up 17 per cent from the year before, despite the political issues in the last quarter. Net profit for the year was Bt120 million, surpassing Bt100 million for the first time, said company president Sopa Kanjanarintr.
Net profit was “unusually high” because the combined ratio (a profitability measure used by insurance companies, the lower the better; it comprises the claims ratio and the expense ratio) was 83 per cent, whereas the usual is over 90 per cent, she said. The target combined ratio this year is 90 per cent, as it depends on premium income. Last year income was still on the high side as a side effect of the floods in 2011.
After the surge in premiums from the 2011 floods, the premium rate in the market has slowly declined. It is expected that premiums will decrease again this year, said Nattawut Nganpinyo, chief operating officer of Falcon Insurance. But despite this decrease, he believes that the growth in sales will be able to offset it to result in overall growth in revenue.
Sopa said the current political situation would have some negative consequences on the non-life insurance market, as most premiums in this segment are derived from property and motor insurance. Many large construction projects have been cancelled or postponed because of the decreasing demand for new property purchases arising from the current crisis. Additionally, many investments in property have been put on hold as businesses wait for the crisis to abate, which could cut demand further.
Nattawut acknowledges that the 15-per-cent growth target was set back in August, before the current political situation erupted. But since there have been no clear effects on profitability for several months, he believes there should be no reason to change the target.