SET-listed Syn Mun Kong Insurance (SMK) filed a rehabilitation petition with the Central Bankruptcy Court on Tuesday after facing heavy losses from Covid-19 claims.
In a statement the company said it was focusing on reorganising its financial structure to solve its debt problems, including converting debt to equity.
SMK confirmed the business is still operating and the company will provide coverage for other kinds of insurance under the same conditions.
SMK managing director Reungdej Dusdeesurapoj informed the Stock Exchange of Thailand (SET) on Wednesday the company filed for bankruptcy protection on May 17, in accordance with the decision of its board of directors.
Mr Reungdej said the SMK board earlier agreed to submit the bankruptcy filing, and the board's decision was sent to the Office of the Insurance Commission (OIC) for approval on May 10.
In the filing, the company promised to restructure its massive debt by seeking more investment funds.
SMK also plans to seek permission to restructure its debt by extending payout deadlines, and wants to negotiate with some creditors to convert debt to equity or shares.
The insurer expects the restructuring plan to allow it to pay for all outstanding claims from Covid-19 insurance with lump-sum payments, along with other insurance products such as vehicle, fire and marine cover.
SMK has reportedly sold 1.95 million Covid-19 insurance policies. If all policyholders filed claims, the company would have to pay a total of 164 billion baht.
On July 16 last year, at the height of the pandemic, the company announced it would cancel all its Covid-19 insurance policies and return the money to policyholders.
However, the OIC stopped the cancellation, saying SMK had to honour the policies it sold.
In 2021 the company recorded a net loss of 4.75 billion baht, which was mainly attributed to Covid-19 insurance losses of 7.63 billion.
The previous year SMK reported a net profit of 757 million baht.
As a result, SMK's loss ratio rose to 135% in 2021 from 62.8% in 2020, with total liabilities of 9.52 billion baht, up 7.18% from the previous year.
The SET suspended trading of SMK shares on Wednesday because the company had not submitted financial statements for the first quarter of 2022.
SMK's share price before the suspension was 11.90 baht.