Insurance giant Thai Group Holdings (TGH) says its subsidiary Southeast Insurance plans to cease operations because it cannot make payment claims for all the Covid-19 policies it issued.
Chotiphat Bijananda, chairman of TGH's executive board, said the company decided to close down Southeast Insurance, its non-life insurance arm, to contain the financial damage from the recent surge in Covid cases and the value of claims.
TGH is a holding company that operated in the life insurance, non-life insurance and financing businesses. Southeast Life Insurance is TGH's main source of profit.
As of Jan 1, Southeast Insurance had remaining net assets of more than 1.8 billion baht and maintained a capital adequacy ratio of roughly 170%.
People wait for Covid-19 vaccination certificates at Simummuang market in Pathum Thani province on Wednesday. Rising claims for Covid-19 payouts by policyholders were cited as the reason for the closure of Southeast Insurance. (Photo: Pattarapong Chatpattarasil)
However, the company projected its capital adequacy ratio may drop below the legal requirement in the near future if the number of Omicron cases and the value of claims continue to rise.
TGH called an extraordinary general meeting to discuss and vote on the discontinuation of its non-life insurance business.
To limit the damage from spreading to other subsidiaries, the executive board agreed to surrender Southeast Insurance's non-life insurance business licence to the Office of the Insurance Commission and transfer its business to Indara Insurance Plc.
Mr Chotiphat said the voluntary closure of Southeast Insurance is different from the closure of other non-life insurance companies whose licences have been revoked.
The company still has enough capital reserves to refund all policyholders and pay compensation to all business partners as well as staff, he said.
Southeast Insurance's closure will not put an additional burden on the General Insurance Fund (GIF) and should have a limited impact on the industry and economy as a whole, Mr Chotiphat said.
The GIF merely acts as the manager and distributor of premium refunds to all policyholders and Southeast Insurance will support the GIF's various responsibilities, he said.
All stakeholders, including 8,629,036 insurance policyholders, 9,000 business partners and 1,396 employees, can rest assured their benefits are fully protected, Mr Chotiphat said.
TGH previously addressed this issue by restructuring its group companies and selling shares of Thai Insurance Plc to major shareholders to raise funds to help Southeast Insurance pay reimbursements for Covid claims.