Insurers cautious with investment
Local insurers say they will have to be more cautious with their investments during the remainder of this year and into 2013 as the US Federal Reserve's latest quantitative-easing measure is likely to increase market volatility.
Insurance companies use the premiums they receive from selling policies to invest in many sources to get return; therefore, market volatility has a great impact on their investment decisions.
Chai Sophonpanich, chairman and chief executive officer of Bangkok Insurance, said it would not invest in stocks because of their high risk. The company will put more importance on short-term fixed deposits, as banks are offering higher interest in a bid to chase funds.
“We have doubled the amount of deposits after seeing the higher rates. However, we will invest only in short-term deposits because the market uncertainty makes it unsafe to play long-term investments,” |he said.
Deposits now account for one-third of the firm’s total investment portfolio of Bt10 |billion.
“Deposits are the best choice for investors that want safety while enjoying good returns,” he said.
Perapart Meksingvee, managing director of Thanachart Insurance, said it had continued to invest in government bonds because of the stability of returns. Moreover, the company is looking for corporate bonds with the good credit ratings to guarantee returns of 4 per cent per annum.
PERSONAL COVERAGE
Thanachart Insurance has also adjusted its business strategy towards personal insurance instead of corporate coverage after the experience of last year’s flood disaster.
“We decided to focus on individual [policies] because we should focus on the area where we have expertise. Apart from auto insurance, we will strongly promote personal accident [coverage],” he said.
Ninety per cent of Thanachart’s premiums come from auto insurance and 10 per cent from personal insurance.The company this year projects premium income of Bt5.8 billion, 23 per cent more than last year.
