Company Visit: Navakij Insurance Plc (NKI)

Published in the Bangkok Post 13th May 2011

The Navakij Insurance Plc (NKI) has been in business for more than 77 years, with both solid financial standing and expert underwriting experience, providing a wide variety of non-life insurance products to the public. With headquarters in the Sathorn Thani Complex in Bangkok, the SET-listed company also has 22 branch offices and five sub-branches nationwide. President Pitiphong Bisalputra discusses the company’s strategy and outlook.

BUSINESS:

Please explain NKI’s business model.

Navakij Insurance is a medium-sized non-life insurer specialising in retail and SME business. Our business income comes from various business partners such as agents, financial institutions, brokers and so on.

Which types of insurance does NKI offer? What is the breakdown per insurance type?

We offer all non-life insurance products including automobile, marine, property, health and other miscellaneous insurance products such as engineering, theft and money protection.

How does NKI invest its assets, what is its target allocation per asset class?

We are preparing to adjust our investment portfolio to deal with the introduction of risk-based capital rules in September. Our target asset allocation for 2011 is: cash and deposits with financial institutions 10%, government bonds 25%, corporate debentures and bills of exchange 28%, stocks 27%, investment units 10%.

Will NKI look to merge with or acquire smaller insurance companies to increase market share?

We do not currently have any plans to merge or acquire other insurance companies but are constantly looking for opportunities to strengthen our company through this method.

INDUSTRY:

With more than 70 insurers in the industry, how does NKI differentiate itself? And how does NKI see the industry progressing over the next few years?

Our strength has always been how we always provide fair treatment and superior service to our insured clients and business partners. This also means providing services to our clients anywhere and anytime from our 27 branches and service centres, new products that meet customer needs and at the right price, and alternative distribution methods to reach the insured more effectively.

As mentioned by various sources with whom we agree, the industry will have to consolidate over the next few years. This consolidation will help insurance companies reduce costs and be more competitive in an ever more difficult environment, including the challenges posed by the risk-based capital rules.

How does NKI see the various type of products available changing over the coming years?

Looking at markets around the world, the essence of current insurance products will not change but more features or tailor-made products for various groups or needs will play an important role as clients become more sophisticated in choosing their insurance cover.

FINANCIAL PERFORMANCE:

With the automotive industry expecting a drop this year from the earthquake crisis in Japan, and since the majority of underwriting fees comes from motor insurance, what will NKI do to alleviate this expected shortfall?

Our plan to alleviate this crisis involves both short- and medium-term plans. This includes plans to increase our renewal ratio via aggressive campaigns, and more product choices. As for new customers, we plan to increase our distribution channels as well as explore alternative channels such as we have done with other lines of business.

MISCELLANEOUS:

What do you feel are the biggest risks facing your business today?

I feel that the biggest risk facing the insurance business is the rapid change facing our industry today. We must understand, accept and adapt in order to survive in today’s environment. The rapid changes are not only internal but also external and sometimes uncontrollable. Examples includes risk-based capital, price competition, natural catastrophes, and so on.

Have the global slowdown and local politics affected your business? If so how?

Yes. Insurance, like many industries, has always been linked to the economy. For example, reductions in imports or exports would mean less marine insurance, while an unstable political climate creates needs for new types of insurance such as terrorism and political violence coverage.

Where do you see NKI in five years from now?

I would like to see us being in the top 10 companies in terms of combined premiums and profits.


The Executive Q&A Series is presented by ShareInvestor, Asia’s leading financial internet media & technology company, and the largest investor relations network in the region with more than 400 listed clients. The interview is conducted by Pon Van Compernolle.

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