BKI sells shares to cover flood insurance
Bangkok Insurance Plc (BKI) has been forced to sell off some of its shareholdings to cover its Bt800 million compensation payments to flood victims.
BKI has sold shares on the Stock Exchange of Thailand worth Bt700 million, chairman and president Chai Sophonpanich said.
The move helps the company’s bottom line by offsetting losses from underwriting revenue, he said.
About 7,500 policyholders of BKI, the country’s third-biggest general insurer in terms of market share, sought compensation of Bt22 billion for flood damage. Of this, Bt20 billion was paid to holders of industrial all risk (IAR) insurance policies.
BKI manages risk coverage totalling Bt800 million itself, and the rest will be handled by reinsurance companies.
The company will pay compensation claims to flood-affected clients gradually, because customers – especially corporate customers – need money to improve businesses.It expects total compensation payments will be completed in the next six months.
Chai said the impacts of the flooding in the fourth quarter would see BKI’s net profit decline in 2011 from 2010.
Despite this, the company still plans to allocate accumulated profit of Bt2 billion to pay a dividend to shareholders, Chai said. Premiums for the whole year should total Bt10.94 billion, just short of its target of 4-per-cent growth to Bt11 billion.
The company expects its performance in terms of net profit and premiums in 2012 will grow from 2011 due to the government’s infrastructure investments, the post-flood rehabilitation efforts, private-sector investment and the bright outlook for domestic automobile sales – all factors that will enhance premiums, Chai said.
The insurance industry should grow by 12 per cent, while BKI projects premium growth of 9 per cent to Bt12 billion.
The company has completed its negotiations with a leading reinsurer, Chai said.
The company cannot reveal the names of its reinsurers, he said, noting that reinsurance firms raise prices and set tight conditions such as a sub-limit of 20 per cent but not more than Bt50 million and a requirement that corporate customers pay deductibles of not less than Bt50,000-Bt100,000.
IAR premiums are expected to increase 20-50 per cent on average. However, the company has suggested customers wait one or two months in case they want to buy flood-insurance coverage, because reinsurers might ease their conditions.
BKI expects strong growth in the retail segment next year through bancassurance channels and a push in the provincial market, Chai said.
