The Ministry of Finance has issued two separate Notifications, published yesterday, with immediate effect, in the Government Gazette, that will relax the foreign shareholding and board limits for life and non-life insurance companies, for the purpose of promoting stability for insurance companies and the insurance industry.
A licensed insurance company (“Company”) may apply to the Finance Minister for permission to have more than 49% (and up to 100%) foreign shareholding, and for foreign directors to comprise more than half of the directors on its board (“Permission”) on the condition that the Company has:
The proposed foreign shareholder must:
Within 90 days of receiving a completed application and supporting documents, the OIC is obliged under the Notification to consider and issue its recommendations to the Finance Minister. The Finance Minister will consider and issue the Permission (or a denial) within 90 days from the receipt of the OIC’s recommendations. In issuing the Permission, the Finance Minister has the authority to impose any rules or time conditions as deemed appropriate.
Once the Permission is issued, among other prescribed requirements, the Company must maintain Total Capital Available (TCA) of not less than THB 1 billion (~USD 30 million) for a non-life Company or THB 4 billion (~USD 120 million) for a life Company at all times, and throughout its business operation period. Any subsequent material change in the shareholding of the Company may require prior approval from the Finance Minister. Any dividend distribution is subject to restrictions prescribed under the Notification, which relates primarily to the Company’s ability to generate net profits and its compliance with its three-year business plan submitted to the Finance Minister and the OIC.
This appears to be a significant movement for the Thai insurance industry, especially on the life insurance side. For the past several years, there has been some direction toward liberalization on the non-life insurance side—possibly due to the various catastrophic events within Thailand over recent years.