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INSURANCE
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Soon Hua Seng Group, one of the country's leading agro-industrial conglomerates, is expected to exit the insurance business by selling its stake in Advance Insurance to the Japanese investment fund Asia Partnership Fund (APF) Group.
According to a source from Advance Insurance, Soon Hua Seng, the majority shareholder of the insurer, has already agreed to sell its stake to APF, as it had been unable to raise capital to meet tougher new capital fund requirements and lacked expertise in the insurance business.
APF is a Japanese private fund with US$850 million in assets under management. It has spent $100 million in Thailand over the past two years, both in the debt and equity markets.
It currently holds sizeable stakes in United Securities, a stock brokerage; Group Lease, a hire-purchase firm; Sunwa Asia Link, a sports training firm; Sunwa World Service, an investment arm in the real-estate business; and Bangkok Station Network, the publisher of the Thai-language edition of BusinessWeek.
Most recently in Thailand, the company has entered into the hospitality industry by taking over the 630-million-baht Zeavola Phi Phi Resort in Krabi, targeting the Japanese tourist market.
Advance Insurance, a mid-sized insurer, was one of four local insurers recently fined by the Office of the Insurance Commission (OIC) for failing to meet the new capital fund requirements. The others were Thanasin Insurance, Finansa Life Insurance and Advance Life Assurance.
Capital funds are a portion of assets in excess of the liabilities of the insurer, in accordance with the appraised value of both.
The Non-Life Insurance Act requires general insurers to maintain capital funds equivalent to 10% of earned premiums, but not less than 30 million baht. The Life Insurance Act calls for life insurers' capital funds to be at least 2% of all reserves but not lower than 50 million baht.
According to the source, the company in June informed the OIC of a planned change in its shareholding structure, but the regulator rejected the petition because direct foreign ownership of 30% would exceed the legal cap of 25%.
The source said the OIC had instructed APF to reorganise the shareholding structure in order to comply with the legal limit, with the process likely to be completed by the end of this month.
''APF has shown a strong interest in Advance Insurance because of the latter's transparent accounting system and sound reputation. More importantly, the company has assets worth about 30 million baht higher than liabilities,'' said the source.
Advance Insurance (AIC) has 300 million baht in registered capital and assets totalling 700 million baht. Last year its written premiums totalled 72.49 million baht.
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