The Office of the Insurance Commission (OIC) has ordered KWI Life Insurance (KWI) to rectify its financial conditions and operations by increasing paid-up capital and refraining from accepting new clients until it meets the legally required capital level.
The company failed to increase its capital by the deadline of Nov 29, the OIC said in a statement.
The insurer was found to have several operational shortcomings, including prepayment to related companies without clear proof of services, lending money to high-risk companies, investing in real estate with related parties without board approval and withdrawing cash advances without proper documentation.
The OIC ordered KWI to take corrective action to meet the capital adequacy ratio.
The order includes increasing its paid-up capital by at least 95 million baht by Dec 20, with further increases scheduled on specified dates.
The company is also prohibited from undertaking the following actions until its capital funds meet the legal requirements: issuing new insurance policies or expanding coverage of existing policies; engaging in high-risk investments or conducting unauthorised business activities; incurring new obligations except for routine expenses approved by the registrar, with the approval of the OIC (such as employment contracts or business-related expenses); appointing additional insurance agents or brokers; and acquiring the operations of other companies.
This ban should prevent potential harm to policyholders and the public, said the regulator, adding KWI's operations will not affect existing insurance coverage or claims under existing policies. Policyholders are assured their entitlements will continue to be honoured, noted the OIC.
"The OIC will closely monitor the company's actions. If further violations are detected, legal action will be taken accordingly," said the regulator.
The Stock Exchange of Thailand yesterday instructed KWI to clarify facts and effects to the company's financial positions and operating results from the OIC order via SET's disclosure system by Dec 4.
The bourse also recommends investors carefully study information before making investment decisions related to KWI.
