Muang Thai Life Assurance (MTL) is on track for a medium-term recovery in profitability, according to a recent report by Fitch Ratings. The company continues to maintain a significant market share, accounting for approximately 11% of Thailand’s total premium income, supported by its key shareholders, KASIKORNBANK and Ageas Insurance International.
Fitch highlighted that MTL’s capitalisation remains strong, with its Risk-Based Capital (RBC) ratio improving to 381% by the end of the third quarter of 2024, well above Thailand’s regulatory minimum of 140%. Fitch forecasts that the company’s capitalisation will remain stable in 2025, following a reduction in financial leverage to 9.5% after the partial repayment of $100 million in subordinated debt in the previous year.
The company’s profitability is also showing signs of improvement, with an annualised return on equity (ROE) of 6.9% for the first nine months of 2024, up slightly from 6.6% in 2023. Fitch expects further enhancements in MTL’s new business value, driven by industry-wide measures to manage medical inflation, including the adoption of co-payment schemes and product repricing.
Growth prospects are also bolstered by MTL’s partnership with KBank and the company’s ongoing digital transformation, which is expected to enhance efficiency and earnings.
However, Fitch noted concerns about MTL’s investment strategy, with a significant exposure to risky assets. The company’s risky asset ratio stood at 237% at the end of Q3 2024, reflecting substantial holdings in equities, below-investment-grade bonds, and sovereign bonds. Notably, the ratio of sovereign investments to capital was 320% during the same period.
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