Authorities post a notice at the Chao Phaya Insurance headquarters on Rama IV Road on March 24 after it failed to maintain the required capital adequacy ratio. [Post file photo]
The finance minister has shut down financially strapped Chao Phaya Insurance Co Ltd by revoking its licence, effective from Friday.
Apisak Tantivorawong on Friday signed the order based on the recommendation of the Office of the Insurance Commission (OIC), the industry regulator.
The regulator on Saturday clarified the reasons for the closure and relief measures for the firm’s customers.
Chao Phaya Insurance, founded in 1997, failed to maintain the required capital adequacy ratio, resulting in a weak financial position, the OIC said in a statement.
“Its liabilities exceeded its assets. The company also filed inaccurate financial statements and reports on its operations multiple times,” it said.
The firm concealed its position by underbooking liabilities from reinsurance and allowances for claims.
On March 23, the OIC ordered the company to stop selling new policies and to rectify its shortcomings by June 29.
The company later sought an extension of the deadline to Aug 28, claiming it was in the process of asking its creditors to convert debts into capital.
The OIC approved the request on condition that creditors agree to the debt-conversion plan by Aug 28. It said it also made sure the company understood that if it failed to do so, the OIC would take drastic action.
As of Aug 28, the company had still failed to secure the pledge from its creditors and could not maintain its capital adequacy ratio, which was -210.8% at the time. Its liabilities also exceeded its assets by 267.78 million baht.
The OIC therefore voted the next day to ask the finance minister to revoke the firm’s licence.
As well, the OIC has announced relief measures to help existing customers of the insurer.
Auto insurance policyholders can contact any of the 26 other insurance companies to take over the policies for the remaining coverage period at no extra charge. They can also buy a one-year policy at a pro-rated discount on premiums equivalent to the remaining coverage period.
For other types of insurance, customers can buy a new policy for the same coverage period with any of the 26 companies, which will extend the coverage by the remaining time they have with Chao Phaya at no extra charge.
Creditors of Chao Phaya Insurance can apply for debt repayment with the General Insurance Fund, which will act as the firm’s liquidator, within 60 days.
By Bangkok Post(Published: 08/09/2018) https://www.bangkokpost.com/business/news/1536438/chao-phaya-insurance-shut-down
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