Thailand’s Office of Insurance Commission (OIC) has opened a public hearing period on a draft notification from the Ministry of Finance (MOF) that would relax foreign shareholding and board limits for life insurers. The hearing period runs until May 31, 2024.
Key principles of the draft notification are outlined below.
Life Insurer Qualifications
Life insurers may apply for permission to exceed 49% foreign shareholding or have a majority of foreign directors if:
- They operate a business that may cause harm to insured parties or the public and either (1) the OIC has directed the company to improve its status or adjust its capital, or (2) the company’s actions may have a significant impact on the insurance industry, causing significant compensation burdens and affecting the company’s capital adequacy ratio (CAR);
- Their shareholders are unable to increase capital; and
- They are unable to attract Thai investors to increase the capital necessary to ensure stability and the long-term operation of the business.
Foreign Shareholder Qualifications
Eligible foreign shareholders must:
- Be an insurance company or participate in the insurance industry;
- Have at least 10 years of relevant experience;
- Demonstrate financial stability and possess a credit rating (or have a parent company with a credit rating) of at least “A” from a reliable credit rating agency;
- Present a clear business plan, financial resolution plan and strategy, and technological and expertise development plan to develop and promote the company’s efficiency and competitiveness in the industry; and
- Be capable of investing and increasing the capital to at least THB 2 billion to maintain stability and maintain a CAR of at least 250%.
In addition, life insurers are required to present a clear restructuring plan and new organization chart to the OIC for further approval by the MOF.
For more details on the MOF’s notification regarding criteria on foreign shareholding limits for life insurance companies, or on any issue concerning insurance regulations in Thailand, please contact Athistha (Nop) Chitranukroh at nop.c@tilleke.com, Witchupong Chittchang at witchupong.c@tilleke.com, Ajaree Trachukul at ajaree.t@tilleke.com, Thammapas Chanpanich at thammapas.c@tilleke.com, or Sireethorn Wijan at sireethorn.w@tilleke.com.
