Standard & Poor's Ratings Services is pleased to present
the Thailand Insurance Outlook for 2007-2008. This publication covers Thailand's life and non-life markets and is based on financial information up to the end of 2006. In the last decade, the country's insurance markets
have come a long way, following the 1997 financial crisis and other global and regional difficulties, such as global investment market volatility and SARS. Performance and disclosure expectations from investors
and regulators have led to improvements in reporting
standards, increasing transparency, skills, and technical expertise of market players. Independent analysis of
market players, as provided by Standard & Poor's, can help identify companies with long-term viability within the Thai insurance market. This will provide policyholders and investors with additional comfort
when making choices in a market in which the participants' financial strength varies widely.
The Thai life market is controlled by a few dominant
players that have been able to achieve operating profitability through scale and scope. Despite the 2006 slowdown in premium growth, the industry has
demonstrated a good operating performance. Competition remains intense with many products
marginally priced, and returns on savings products not covered by investment yields until recently. Long-term growth is expected to remain strong. Success will
depend on companies being able to offer innovative products that would allow an increase in market
penetration through multiple distribution channels. The Thai non-life market is characterized by a predominately short tail insurance business, good underwriting performance, and satisfactory liquidity, but challenges remain. In this overcrowded market, smaller players without a strong niche or affiliation to support their position will struggle to survive. Market participants are also afflicted by relatively high expense structures and insufficient scale of business to support them. Consolidation is likely to take place. However,
proposed capital increases and risk-based capital requirements, together with demanding compliance
costs, would exacerbate their already high expense bases.