Lower new car sales expected to hit non-life business this year

The total premium income of Thailand’s non-life insurance companies is expected to decrease this year, pushed down by weaker new-car sales as the motor line accounts for about 60% of total premiums, says Fitch Ratings.

In its report, “Thailand Non-Life Insurance Market Dashboard 2020”, Fitch says that the overall business fundamentals for non-life insurers have also deteriorated due to widespread disruptions to local businesses and social activities following the coronavirus outbreak.

Earnings for 2020 for Thai non-life insurers could be mixed. While non-coronavirus-related claim losses of the motor, personal accident and general health products could improve with fewer people travelling due to lockdowns in 1H2020, insurers’ bottom lines could still decline due to lower new premiums for the rest of the year. Investment incomes are also under pressure from persistently low interest rate and losses from market volatility.

Fitch expects Thai non-life companies’ capital positions to deteriorate in 2020, due to falling operating profits and the decrease in market value of investment assets. The insurers’ investment asset mix has been quite stable. The sector has generally invested in liquid assets with low holdings in esoteric assets. The overall quality of fixed-income securities is sound.

Asia Insurance Review

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