News Column

Sri Ayudhya Capital has its sights on rival companies

July 21, 2014

By Darana Chudasri, Bangkok Post, Thailand

July 21--Sri Ayudhya Capital (AYUD), a SET-listed insurance holding company under the Bank of Ayudhya (BAY), is keen to acquire more insurance companies with its additional liquidity of 1.9 billion baht from a recent divestment, says the company's head.

"There are 66 non-life insurance companies in Thailand, and this is too many. This could lead to mergers and acquisitions in the medium-term," said Rowan D'Arcy, president and chief executive, adding 44-45 insurers would be an appropriate number.

The insurance industry is expected to face mounting pressure from higher tariffs and deregulation in Asean, which could be a threat to small-scale insurers or those without much capital.

The company invests in both life and non-life insurance companies. It holds a 20.17% stake in Alliance Ayudhya Assurance (Azay), and 99.99% in Sri Ayudhya General Insurance (Sagi).

Mr D'Arcy said the insurance business is expected to grow gradually in line with the economic recovery, improving grass-root purchasing power after the long overdue rice pledging payment to farmers and consumers' increasing higher education levels.

The company's earnings likely grew at a slow pace for the first six months as the slump in domestic car sales lowered demand for insurance policies. Motor insurance contributes around 60% of Sagi's revenue.

For the first quarter, the company reported net profit of 276 million baht, up 29.6% from 213 million.

Chusak Salee, managing director of Sri Ayudhya Capital, said it is still looking for acquisitions of insurance companies because of the big number of players.

"We are also looking for long-term investment opportunities in equities, bonds, and the insurance business," he said.

Mr Chusak said operating performance is expected to recover in the second half as car sales are projected to pick up. Its earnings are expected to hit a record high this year, thanks to the one-off gain from a divestment in the third quarter.

AYUD's shares jumped 70% over the past five months. They closed unchanged on the SET on Friday at 40 baht in trade worth 2.5 million baht.


(c)2014 the Bangkok Post (Bangkok, Thailand)

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Source: Bangkok Post (Thailand)

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