Falcon may raise capital after surge in premiums

Chief executive officer Oran Vongsuraphichet said yesterday that if the company’s premiums grew by 80 per cent this year as expected, the existing capital might not sufficient, so there was a high chance it will increase it.
Falcon’s capital adequacy ratio is 300 per cent, higher than the 125 per cent required by the Office of the Insurance Commission.
The company has discussed an increase in capital with its shareholders, Navakij Insurance and Falcon Insurance Co (Hong Kong), both of which are willing to support such a plan.
Falcon expects its premiums this year to expand by 80 per cent from Bt660 million last year.
As a result of the 2011 flood disaster, some insurers have less potential to service the commercial sector, so corporates have switched to Falcon for their insurance needs.
As a result, the company’s gross premiums in the first half of this year were Bt652 million, up by 86 per cent over the same period last year.
 It estimates its gross premiums for the full year will grow by 80 per cent to Bt1.2 billion and its bottom line will turn to profit of Bt40 million from a net loss of Bt2 million in 2011.
Commercial customers now account for 87 per cent of total premiums, up from 70 per cent, while the personal-policy portfolio has declined to 13 per cent.
Commercial policies are sold through brokers and personal ones via direct sales.
Oran said the company wanted to increase the proportion of personal insurance premiums to 30 per cent to balance the portfolio and diversify risk. To expand the personal line, the company will use sport marketing as a key strategy.
The ratio of premiums from commercial versus personal |policies should be 70:30 by |2014.
The commercial segment likely carries higher risk than the personal line, as reflected by the flood last year, which resulted in the net loss of Bt2 million.
“We have gross claims of Bt3.8 billion from 210 flood-affect customers, mostly commercial. We have paid compensation of Bt1 billion but the remaining Bt2.8 billion will take longer because most of those claims are business-interruption insurance,” he said.
Falcon has to get professionals from overseas to investigate such claims.