Thailand’s Syn Mun Kong Insurance Public Company (SMK) has lost its non-life insurance business license following an order by Finance Minister Pichai Chunhavajira on 4 July.
The decision comes following the publicly listed company’s insolvency, which occurred after substantial losses from nearly 2 million COVID-19 lump sum payment policies. The business is the fifth insurance firm in Thailand to go under due to the pandemic.
The Finance Minister also announced the appointment of the Non-Life Insurance Fund as the liquidator. The Fund will take control of the company’s assets and sell them on the open market to raise funds to compensate policyholders, particularly those with COVID-19 coverage.
The manager of the Non-Life Insurance Fund, Chanaphol Mahawong, stated that they will issue an announcement via their web page inviting policyholders to register to claim payments within 60 days.
However, he said insureds must be prepared for slow payments, as the Fund has incurred about 50bn baht in debt, owed to more than 600,000 claimants who were customers of insolvent insurance firms.
With Syn Mun Kong’s inclusion in the list of insolvent companies, the Fund’s total debt will increase to about 90bn baht, and the number of affected policyholders across the five companies will rise to about one million.
“The Fund is capable of settling only about one billion baht of the debt per annum,” which means it will take the Fund at least 80 years to settle all of it.
SMK, listed on the Stock Exchange of Thailand (SET), experienced significant losses after selling nearly 2 million COVID-19 lump sum payment policies. These claims led to a sharp increase in its loss ratio and liabilities. In 2021, SMK declared a net loss of THB4.75bn, with COVID-19-related losses totalling THB7.63bn.
Efforts to relieve financial pressure by cancelling COVID-19 insurance policies in July 2021 were obstructed by the OIC, which directed the insurer to uphold any sold agreements.
The insurer filed for bankruptcy protection on 17 May 2022, seeking to restructure debts through various means, including converting debt to equity with creditors. However, the Central Bankruptcy Court rejected this rehabilitation petition.
Despite these setbacks, SMK had maintained active insurance activity in other lines of business not impacted by COVID-19 claims, such as motor, property, and marine.
In December, the Office of Insurance Commission (OIC) directed Syn Mun Kong Insurance (SMK) to cease taking on new policyholders. At the time, Adisorn Phipatworaphong, the OIC’s assistant secretary-general for legal affairs and cases, said the decision was made to “prevent harm to customers or the public.”
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. Before trading was halted, its last recorded share price was 11.90 baht.
