Bangkok--20 Jul--Fitch Ratings
Link to Fitch Ratings' Report: Thai Life Insurance Industry
Fitch Ratings has today said that it expects Thailand's weak economic environment and political turmoil to have a limited impact on the country's life insurance industry. The agency is forecasting continued industry growth over the medium term, thanks to increased product awareness, tax incentives and aggressive marketing through bancassurance.
"Life premium has been growing steadily despite the weak economic environment in the last few years. The impact from the political unrest also appears to have been contained, with only short-term business disruptions seen during May when the situation was escalated," says Narumol Charnchanavivat, Director at Fitch Ratings (Thailand) Limited.
The industry's profitability has recovered well from the 1997 Asian crisis, with earnings enhanced by gains on investments. Meanwhile, the insurers' asset structures have shifted towards low-risk concentrations due to tighter regulation of investments and from the development of the local bond market. However, Thai life insurers, as with regional peers, continue to face the challenge of a mismatch between assets and liabilities, given the scarcity of local long-dated bond issues.
While a regulatory overhaul is likely to lead to further development of the industry, it could also result in an industry shake-up and increased M&A activity over the longer term. Asset/liability mismatch, scarcity of skilled personnel, and weak corporate governance and risk management practices remain major challenges for the industry.
Contact: Narumol Charnchanavivat, Bangkok, +662 655 4763; Wan Siew Wai, Singapore, +65 6796 7217; Jeffrey Liew, Hong Kong, +852 2263 9939.
Media Relations: Shivani Sundralingam, Singapore, Tel: + 65 6796 7215, Email:
[email protected].
Additional information is available at www.fitchratings.com.