The Office of the Insurance Commission (OIC) is expected to give Syn Mun Kong Insurance Plc (SMK) 60 days to solve its liquidity problems and raise capital, but the regulator said the ailing insurer is unlikely to meet the deadline.
SMK was determined to have total liabilities of 30 billion baht, higher than its assets, said Somporn Suebthawilkul, president of the Thai General Insurance Association.
If the company's licence is revoked, the entire burden will fall on the General Insurance Fund, which has total funds of less than 1.4 billion baht, excluding the burden from four insurers ordered to close last year because of losses from Covid policies.
The OIC ordered SMK to temporarily stop accepting new customers from Dec 15 after the Central Bankruptcy Court revoked its rehabilitation petition on Friday, to protect its customers and the public from the possible impact.
The regulator noted SMK has more debts than total assets and its capital adequacy ratio is lower than the legal limit. The OIC requested a freeze on SMK's assets to prevent it from moving assets.
"To prevent the company, agents and insurance brokers from selling new policies during the suspension, the OIC will appoint a team of officials to be stationed at SMK to look after its operations and provide maximum benefits to the public by performing the duties of the directors and executives of the company," the regulator said.
SMK was ordered on Oct 31, 2022 under Section 52 of the General Insurance Act of 1992 to increase its capital and correct its financial position to meet its obligations and have a legal capital adequacy ratio within one year.
The company neither increased its capital nor corrected its financial position in accordance with the order.
Instead, SMK relied on the business rehabilitation process according to bankruptcy rules.
When the one-year period expired, the company submitted a request to extend the restructuring period.
SMK filed the rehabilitation petition with the court on April 25, 2022, after facing a huge loss because of Covid-19 lump-sum policies.
On Dec 15, the court ordered the cancellation of the rehabilitation plan.
Following the court's order, the authority and responsibility to manage SMK's business and assets were returned to its management and shareholders, allowing the company to move or sell its assets.
"The company has a status that may cause damage to the insured and the public," said the OIC.
The regulator agreed to exercise power under Section 52 to order SMK to temporarily stop providing non-life insurance.