Thailand Regulator Orders 2 Non-Life Insurers to Stop Accepting New Clients

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Thailand’s insurance regulator ordered Southeast Insurance Pcl and Thai Insurance Pcl to stop taking new clients and sell some assets after their capital fell below the legally required levels.

The non-life units of Thai Group Holdings must boost their balance sheets to meet capital requirements within 30 days, the Office of Insurance Commission said in a statement on Thursday. Value of each firm’s assets has fallen below their liabilities, while cash and other liquid assets are insufficient to pay compensation claims by customers, the regulator said.

Thai Insurer’s Coronavirus Cover Draws ‘Overwhelming’ Demand

Both insurers, controlled by billionaire Charoen Sirivadhanabhakdi, have run into financial troubles partly because of policy claims related to payments for COVID-19 illnesses. Southeast Insurance and Thai Insurance in January sought permission to cease non-life operations and coverage. The requests for liquidation is still being assessed by regulator, according to the commission’s statement.

The firms have “substantial outstanding claims that haven’t been settled,” said agency Secretary-General Suttipol Taweechaikarn. “The orders will help preserve the companies’ assets and accelerate claim payments to their customers.”

Local insurers such as Southeast Insurance, Syn Mun Kong Insurance Pcl and Bangkok Insurance started selling policies for COVID-19 infections in 2020 when fear outpaced the infection rate within the country. The policies, considered by many both a novelty and status symbol at the time, typically paid as much as 50,000 baht ($1,502) to someone with the coronavirus for premiums of as low as 300 baht.

Thailand saw its daily COVID-19 cases jumped to more than 20,000 since late February from less than 10,000 in January with the spread of Omicron variant. That’s once again filling up hospitals and heaping pressure on insurers.

Thai Group Holdings reported a full-year net loss of 3.26 billion baht in 2021 from a 728 million baht profit a year earlier. Thai Group shares have tumbled about 40% in the past year, wiping out more than $600 million in market value. Charoen is Thailand’s richest person with net worth of $15.4 billion, mostly from his liquor and retailing businesses through Thai Beverage Pcl and Berli Jucker Pcl, according to Bloomberg Billionaires Index.