BAY targets Bt6 bn premiums via partners

Bank of Ayudhya (BAY) expects its two new life-insurance alliances to boost its bancassurance business premiums to Bt6 billion this year.

The bank yesterday announced that it had formed partnerships with Ayudhya Allianz CP (AACP) and Thai Life Insurance last Thursday. BAY plans to focus more on bancassurance, selling AACP's products in Bangkok, while Thai Life Insurance policies will be sold at upcountry branches.

Kris Chantanotoke, executive vice president of the wealth-management and bancassurance division of BAY, said AACP's products were aimed at policyholders who require alternative investments with high returns, particularly Bangkokians. Thai Life Insurance's products are more popular among upcountry folk who demand stable returns, he said.

The decision to partner with two firms reflected what the bank has learned about its customers' lifestyles and diverse demands, he said.

BAY previously had a business alliance with AIA.The bank has restructured its services and now employs some staff who only sell life insurance, Kris said. It expects the addition of the specialist staff, along with the strength of the new partners' products and the recent hike in interest rates, to boost premiums in the second half of this year.

Kris said BAY expected the central bank to leave its policy interest rate unchanged at its next meeting in October, but to raise it to 3.75 per cent at its last meeting of the year in November.

BAY's premiums are expected to grow at a faster rate in the second half, which is projected to account for about 60 per cent the annual total.

Total premiums this year are expected to grow by 30 per cent to Bt6 billion. First-year premiums are expected to total Bt1.5 billion to Bt1.6 billion.

Investment in life-insurance policies is expected to increase steadily thanks to tax deductions and the policies' more attractive returns than savings deposits, Kris said.

The proportion of BAY's assets in deposit accounts was 70 per cent in 2000, but the very low interest-rate environment from 2005 to 2010 saw people shift to mutual funds and life insurance, pushing the deposit ratio below 50 per cent this year.

"We expect the ratio of deposits will fall by 20 per cent in the next 10 years, based on the events of the past 10 years," Kris said.

Kim Eng Securities (Thailand) said in a recent study that BAY's new life-insurance partnerships would see its bancassurance fee income increase next year from the current 10 per cent of total fee income.