Krungthai-AXA to enlarge bancassurance share in sales

Currently the ratio of bancassurance to agency sales is 45:45, with the remaining 10 per cent corporate solutions. The aim is to make the ratio 50:45:5 by 2015, said chief executive officer Mike Plaxton.

He said the company had decided there should be less of a gap between the sales contributions of bancassurance and agencies. The latter channel has shown higher consistent growth than bancassurance, which has persuaded the company to focus more on building a corps of quality agents to retain income growth. 

“We believe we can grow through the agency channel apart from bancassurance, which is supported by our shareholder Krung Thai Bank. Our sixth-place ranking will be raised by 2015,” he said.

Currently, Krungthai-AXA Life Insurance has 8,000 agents. It will add 300 more this year. 

The company did not reveal its growth target for 2012 as its major shareholder, AXA Group, is a listed company in France. 

However, in the first two months, premiums grew by 52 per cent year on year, far beyond target, Plaxton said.

Krungthai-AXA Life Insurance yesterday reported net income in 2011 of Bt1.67 billion, up from Bt1.5 billion in 2010, while new business was increased by 9.2 per cent to Bt7.1 billion and gross premiums of Bt21 billion marked an increase of 20 per cent. Of total new business of Bt7.1 billion, premiums from bancassurance were Bt35.7 billion, up from Bt3.4 billion. Premiums from agencies rose to Bt3.18 billion from Bt2.5 billion while those from corporate solutions dropped to Bt334 million from Bt600 million.

Plaxton said the company had no immediate plan to list on the Stock Exchange of Thailand, as it had strong capital; however, it is prepared to upgrade to a public company as required by the Insurance Commission. All insurance companies must convert to public-company status by next February.

Chief financial officer David Korunic said the company planned to increase its proportion of investment in equities to 10-12 per cent this year from 8 per cent and would reduce investment in bonds because equities are likely to give higher returns.

Last year, the company saw a return on investment of 5 per cent. Korunic said the trend to lower interest rates and market volatility might have an impact on returns but it would maintain the yield of 5 per cent. 

The company recently invested in the Tesco Lotus property fund, which is part of its equities portfolio. 

As of the end of last year, Krungthai-AXA Life Insurance had invested assets of Bt52.38 billion, 83 per cent in bonds, 5 per cent in short-term products, 8 per cent in equities 4 per cent in others.