Siam Samsung hopes for profit by 2016
After a change of focus to individual policies and personal agents, Siam Samsung Life Insurance aims to realise net profit for the first time in 2016 since establishing its business in Thailand in 1997.
Donald Carden, president and chief executive officer, said yesterday that the parent company and shareholders had recognised that life insurance could not generate profit at the beginning because the firm needed to invest heavily to ensure growth in the long term.
However, after the company shifted focus to agency sales and individual insurance from group insurance this year, Siam Samsung believes it can generate profit within four or five years.
Carden said that given the strong financial status of Samsung Group and two local partners – Saha Group and Thanachart Bank – Siam Samsung Life faced no barrier to investing a large sum to create agencies and upgrade technologies, including those of its South Korean parent.
It plans to increase capital by Bt110 million from Bt650 million to support its business plan. The company targets annual premium growth of 50 per cent.
By 2016, Siam Samsung plans to have 15,000 agents, up from 6,000 this year. It expects to have 2 million policyholders by then, up from 800,000 now, of whom 300,000 will be individual clients, compared with just 35,000 currently.
About 80 per cent of total premiums will come from agents, and the rest through telesales and leasing companies.
Carden said many insurers were focusing on bancassurance, clearing the way for Siam Samsung to concentrate on the agency channel. Even thought bancassurance is the fastest growth channel, the company believes agents can access consumers nationwide better than bank branches.
Of Thailand’s population of more than 65 million, 10 million are bank customers, leaving the rest as potential customers for agents, he added.
The company plans to expand its distribution channels as well, and is in talks with several leasing companies.
Siam Samsung has focused more on individual insurance because it witnessed losses from group insurance, leading to the strategy adjustment this year. The premium portfolio from individual insurance this year is 79 per cent and the remainder group insurance.
Bundit Jiamanukoonkit, senior executive vice president and chief distribution officer, said premiums from agents this year were expected to grow by 116 per cent to Bt551 million, compared with more than Bt900 million from all sales channels. However, gross premiums this year will see flat growth compared with last year because the company will have to absorb a loss of Bt300 million from group insurance.
He said the company was also developing its own telesales to move away from outsource companies. The telesales operation is expected to launch in the first quarter next year.
