Bangkok Insurance earnings back to pre-flood level

In insurance-industry jargon, an underwriting profit is that derived from premiums only (excluding investment and other income) after losses and expenses are deducted. 

President Panus Thiravanitkul said yesterday that before the disaster, the company had declared an annual underwriting profit of Bt600 million. The company projects the underwriting profit to come in at Bt200 million in each of the remaining quarters of this year, which would put annual underwriting earnings above the Bt600-million mark.

BKI witnessed underwriting losses of Bt1.1 billion in 2011 and Bt2.2 billion last year.

Motor insurance was the key profit driver in the first half, and is expected to maintain momentum over the remainder of the year, thanks to the government’s first-car scheme. 

The pre-tax underwriting profit of Bt736 million in the first six months is largely accounted for by profit from motor insurance, at Bt347 million, and industrial all-risk insurance, at Bt318 million.

However, the loss ratio from motor insurance is high, which could lead to an increase in premiums in the near future, he said, adding that the increase in the minimum daily wage to Bt300 had also driven up the cost of auto repairs. Moreover, the number of auto garages in the company’s network is not enough to cope with claims repair work, which means Bangkok Insurance has to increase the number of garage partners to meet demand, he said.

The loss ratio from motor insurance is 60 per cent, which is roughly in line with the market average of 58 per cent.

Panus said premiums in the first six months totalled Bt7.82 billion, up 27 per cent from the same period last year. The company believes it can, therefore, hit the full-year target of Bt15.3 billion.

He said that even though the outlook for new premiums was that the second half would be slower than the first part of the year, the company expected to see stronger growth than the industry average due to its strong focus on retail customers, both motor and property.

Retail customers this year account for 53 per cent of business, against 51 per cent last year, as the company seeks to capture more business in the segment by using bancassurance and telesales channels. 

Anon Vangvasum, executive vice president of Bangkok Insurance and president of the Thai General Insurance Association, said the association expected premiums in the second half to expand by 10 per cent year on year, compared with growth of 20-22 per cent in the first six months, because of the completion of deliveries under the first-car scheme and lower consumer purchasing power.

Premiums for non-life insurance this year are expected to reach Bt260 billion, he said.