Bangkok Post : MSIG sees profit after paring automobile losses
by admin on Aug.19, 2010, under Car insurance
MSIG Insurance is back on track for profitability after settling its operating losses from the motor insurance business.
The affiliate of the Japanese insurance giant Mitsui Sumitomo Insurance (MSI) posted a net profit of about 100 million baht last year.
With a net profit of more than 70 million baht in the first seven months of this year, it expects the full-year figure to beat 2009 thanks to sales growth and selective underwriting of car insurance.
Sangiam Dangprasert, the general manager for agency and branch operations, said earned premiums were forecast to grow by at least 17% this year to 2.5 billion baht, of which 1.2 billion baht will come from agency and branch channels, up by 40%.
Brokerage, bancassurance and direct sales are expected to grow by 25% to 1.3 billion baht.
Driven by the country’s recovering economy and growing exports, MSIG reported significant growth of 28.2% in earned premiums to 1.3 billion baht in the first half of this year.
MSIG, formerly known as Aviva, has kept a low profile in recent years because it has been busy with reorganising the US$450-million cash acquisition of the Asian general insurance operations of UK-listed Aviva Plc by MSI in 2004. The deal also included Aviva’s Thailand operation, which was 49% owned by Aviva.
MSIG has also been struggling to reverse operating losses in recent years, primarily from motor insurance.
Mr Sangiam said in its best bid to remedy the operating losses, the company has in recent years raised premiums mainly for city cars by 20% to cover higher risks and become more selective in underwriting car insurance.
Currently, motor insurance accounts for about 47.8% of MSIG’s premiums.
“Despite it being a relatively high-risk sector, motor insurance remains a major source of our sales,” said Mr Sangiam. “We may lower our premiums by about 10% to boost our motor insurance sales while beefing up business expansion, notably for fire, personal accident and motor coverage, into provincial areas, which now contribute about 45% of the company’s written premiums.”
MSIG’s clients are largely domestic retail outlets and small and medium-sized enterprises, while MSI Thailand’s key customers are local companies and Japanese firms operating in Thailand.
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