Troubled Thailand still a priority country in insurer’s regional growth strategy

The regional president of the ACE’s Asia-Pacific franchise Juan Luis Ortega (pictured) has named Asia-Pacific as a strategic growth region for his company, and has tagged Thailand as a “key growth market”.

He said that this view was highlighted by ACE and its local partner reaching a conditional agreement to purchase a 60.9% stake in general insurance company The Siam Commercial Samaggi Insurance PCL from Siam Commercial Bank.

“This acquisition will expand our presence in this under-penetrated insurance market characterised by rising per capita income,” Ortega told StrategicRISK. “It is an excellent opportunity for ACE to expand its presence in personal and small commercial insurance in Thailand.”

Established in 1947 and listed on the Stock Exchange of Thailand, Bangkok-based Siam Commercial Samaggi Insurance is a major writer of automotive, small commercial and personal accident insurance. The insurer had approximately $138m in gross written premium in 2012.

Ortega said that ACE’s Thai operations and Samaggi’s businesses were “highly complementary”. “Samaggi’s current focus is personal lines [auto and home], small commercial business and bank-distributed accident and health (A&H), while our operations focus on direct marketing and telemarketing distributed A&H and large commercial lines business,” he said.

Speaking to StrategicRISK shortly after he succeeded Damien Sullivan as regional president of ACE’s Asia-Pacific division late last year, Ortega pointed out that areas of concern be believed were “looming” included political, civil unrest and terrorism risks. Ortega said at the time that such risks were increasingly relevant in societies undergoing significant social change. Such concerns will no doubt be front of mind with this acquisition, as Thailand is currently experiencing significant political and social upheaval.

The transaction is expected to be completed in the second quarter of 2014. It is subject to due diligence by ACE and customary closing conditions including Siam Commercial Bank shareholder approval.

ACE and its local Thai partner will then make a mandatory tender offer for the remaining 39.1% of Siam Commercial Samaggi Insurance. The total transaction is valued at approximately $185m.