KPI boosting retail customer base to double return on equity

 The company saw ROE of 3 per cent last year, while parent company Krung Thai Bank (KTB) wants its subsidiaries to have double-digit returns.
KPI president Supachai Piakeaw said this would be a challenge for the company, which has a high capital adequacy ratio of 557 per cent and shareholder equity of Bt3.65 billion.
He said it would expand not through acquisitions but by broadening its retail-customer base to increase profit. KPI plans to increase the proportion of retail customers to 80 per cent this year from 70 per cent and reduce the proportion of corporate customers accordingly.
The company will work through the bancassurance channel and co-develop product bundling with KTB. Premiums through bancassurance account for 50 per cent, with the rest from telemarketing and agents.
Gross premiums this year are expected to grow by 21 per cent to Bt2.6 billion and profit from underwriting of Bt900 million, up by 58 per cent from Bt570 million last year.
KPI projects net profit this year of Bt380 million against Bt136.51 million last year.
To improve ROE, KPI will also place importance on auto and miscellaneous insurance, Supachai said, adding that next month it would launch auto insurance class 2 plus, and class 3 plus covering flood damage.
Meanwhile, the company will give weight to investment in unit trusts and equity because of their high return. Of investments worth Bt3.7 billion this year, unit trusts and equity have been set at Bt1 billion.
KPI expects investment income this year of Bt230 million, similar to last year, and return on investment of 6 per cent.
Supachai said the company had paid 80 per cent of its customers’ compensation claims from last year’s flood disaster. Reinsurance compensation might not be made quickly because insurers are still investigating flood-damaged machines in many factories.
The flood crisis in the fourth quarter last year brought KPI’s 2011 net profit down to Bt136.51 million from Bt333.95 million the previous year.