The Office of Insurance Commission (OIC) in Thailand has directed Syn Mun Kong Insurance (SMK) to cease taking on new policyholders following the Central Bankruptcy Court’s decision to refuse the insurer’s rehabilitation petition.
The OIC’s assistant secretary-general for legal affairs and cases, Adisorn Phipatworaphong, said the decision came to prevent harm to customers or the public, following the Central Bankruptcy Court’s ruling on Friday.
SMK, listed on the Stock Exchange of Thailand (SET), experienced substantial losses following the sale of nearly 2 million COVID-19 lump sum payment policies.
Claims resulting from the policies resulted in a substantial increase in its loss ratio and liabilities. In 2021, the insurer declared a net loss of THB4.75bn (US$136m) for 2021, with COVID-19-related losses totalling THB7.63bn.
SMK’s attempts to relieve financial pressure by cancelling its COVID-19 insurance policies in July 2021 were obstructed by the OIC, who directed the insurer to uphold any sold agreements.
The insurer filed for bankruptcy protection from the Central Bankruptcy Court on May 17 2022, looking to restructure debts through various means, including converting debt to equity with creditors. However, the Court rejected this rehabilitation petition on Friday.
Despite the setbacks and ongoing legal developments, the non-life insurer has maintained active insurance activity in other lines of business not impacted by COVID-19 claims, such as motor, property, and marine.
The financial strain and inability to submit its first-quarter financial report led to the suspension of SMK’s shares on the SET in May 2022. The last recorded share price was 11.90 baht before the cessation in trading.
