COVID-19 causes closure of loss-ridden major insurance company
The Stock Exchange of Thailand (SET) was officially notified today (Wednesday) by Thai Group Holdings (TGH) of the decision of the board to close down one of its subsidiaries, Southeast Insurance, after it suffered a hefty loss caused by compensation payments made to customers who took out insurance coverage for COVID-19 infections under the “Found, Paid, Done” insurance plan.
In the letter, addressed to the SET, Thai Groups Holdings (TGH) chief executive officer, Chotipat Pichanon, said the company’s board decided to put an end to the insurance business of Southeast Insurance and to return its operating license to the registrar.
He explained that there was no other option, after the company had injected fund to increase capital to shore up the financial standing of the ailing insurance company, especially the 9.9 billion baht fund from the Thai Capital Corp (TCC) Group, its major shareholder.
He said that, if Southeast Insurance were to be allowed to carry on with its business under such circumstances, its operating license will have to be revoked in the end, so it is more appropriate to close voluntarily and return the operating license, a route which will be most beneficial to all parties concerned.
Chotipat assured millions of the company’s customers who have taken out insurance with Southeast Insurance Company will receive their refunds.
All the car maintenance shops and hospitals which have contracts with the company and insurance sale agents, totalling about 9,000, and all the company’s 1,396 staff will get paid.
More than 10 million of the company’s customers have taken out insurance policies with the company, 1.85 million of whom have taken out insurance to cover COVID-19 infections. The company’s capital adequacy ratio is 170%, which is higher than the 120% legally required.