Thailand's Bangkok Insurance going strong despite looming pressures

Its balance sheet is supported by strong risk-adjusted capitalisation.

Thailand’s Bangkok Insurance (BKI) is seeing strong operating performance, supported by robust underwriting and investment income, but the pandemic and a competitive market are likely to pressure these metrics over the short-to-medium term.

According to an AM Best report, the insurer recorded a five-year average return on equity (ROE) of 7.4% and a 79.1% operating ratio from 2016 to 2020. Its balance sheet is underpinned by strong risk-adjusted capitalisation, with capital adequacy supported by low net underwriting leverage.

On the other hand, the latter is partially offset by a high-risk investment portfolio consisting of large and concentrated holdings in domestic equities. 

Other balance sheet considerations include the company’s robust regulatory solvency and its moderate dependence on reinsurance to manage exposure to catastrophe events, accumulations and large single risks, the report said.

The insurer’s reported shareholders’ equity has been on a decline due to unrealised fair value losses arising from available-for-sale investments.