What new initiatives is Thai Samsung Life Insurance currently involved in?

CARDEN: Currently, the new initiative we are involved in is building our agency distribution channel. In the past, we had been focusing almost entirely on our Group business. Our strategy for the future is to focus on individual life business. We want to build up our in-force block of individual life policies; we currently have about 50,000 individual life insurance policies in force. We want to build this up to about 300,000 – 350,000 individual life insurance policies before 2016. We are working very hard on achieving this goal. Our plan is to build two separate agency distribution channels at the same time. The first is building our general agency system. This is the main agency channel here in Thailand in terms of individual life distribution. The other channel is what we call our LP (Life Planner) channel. This mirrors how we do business in Korea. We want to take advantage of the knowledge and expertise of our parent company, Samsung Life Korea, and bring the model we use in Korea to Thailand. We feel such action will give us an advantage in terms of competitiveness since we have had tremendous success building agency distribution through Samsung Life Korea.

How did the flooding of 2011 affect the life insurance market here in Thailand?

CARDEN: It was a tough time. The country was about three-fourths under water. Bangkok was not as badly affected by the flooding as other provinces up country, but our staff members that lived just outside of Bangkok were under water and they could not get into the office. As a result, we were shut down for about eight or nine days. Thai Samsung Life is located on the 15th floor of our building so the office was dry and we had electricity. The problem was our staff couldn't get here. Many of the roads in Bangkok were flooded and the buses could not travel to take our people back and forth. Also, many members of our staff have families that live outside of Bangkok and our staff had to travel up country to help their families. We basically lost the month of November 2011. However, we came back very strong in December and the industry ended up having a pretty solid year. The flooding was definitely a problem and hopefully such a thing will not happen again. I have lived in Thailand for more than 13 years and have never witnessed such devastation to people’s homes. Hopefully, this was a once-in-a-lifetime experience.

The Thai life insurance industry is expected to grow about 15% in 2013. What are the underlying reasons for this growth?

CARDEN: We are in a very good situation here in Thailand in terms of the insurance market. Our penetration rate in terms of the number of Thais who actually own life insurance is only about 25%. This is very low compared to most first world countries. When I came to Thailand in 2000, the penetration rate was about 10%. The target set by the government is to reach 50% penetration by 2020. We are actually on track with that model now. In many developed countries, such as Singapore, Japan, Hong Kong, and Taiwan, more than half of their population already has life insurance policies. This is not true for Thailand. When our agents visit people, most of the time they discover that the prospect has no life insurance at all. This gives our agents a strong selling opportunity. There are not many places in the world today where such an opportunity exists. Therefore, our industry is growing very quickly. The government also gives incentives, such as tax reductions, to people who buy life insurance because they understand the long-term purpose of our product and service. When you take into consideration the government tax incentives and the fact that people here do not have life insurance, the market grows very quickly. For the past 10-12 years, the Thai life industry has seen double-digit growth. This year, we are expecting 15% growth. Looking back over the past 4-5 years, you will see that the life insurance industry has grown faster than any other industry in the business sector here. If you want to find the fastest growing industry in the Thai business sector, life insurance is the winner by far.

What is Thai Samsung Life Insurance’s current market share? How do you plan to increase it?

CARDEN: Thai Samsung Life’s market share is less than 1%. We are a small company, but right now we are ranked among the top 20 after being previously ranked among the top 25. Therefore, we are definitely growing. The top 5 life insurance companies have been here for a very long time, and most have banks connected to them. Thai Samsung Life has been here for only 15 years and we do not have a bancassurance affiliation. The bulk of our sales are through agency distribution, which account for more than 75%. Our Group business today accounts for about 15% of our total business. We are always taking advantage of the expertise we have from Korea to look at different ways we can do business here in Thailand in order to grow much faster than the industry. Last year, we grew our individual life business by triple digits. The industry grew by 15% and we grew by triple digits. We expect to grow our individual life business between by around 60% - 80% per year over the next 5 years. With such rapid growth, we expect to move into the top 10 in the industry sometime between 2016 and 2017. Thai Samsung Life is determined to become a major player here in Thailand. The past is different and Samsung Life Korea now has a completely different vision about our operation here. Samsung Life of Korea has been mostly a domestic carrier in the past. However, now that Samsung Life is determined to grow the international business, I think t you will see our company grow very quickly during the years to come.

Despite ownership restrictions by the Office of Insurance Commission (OIC), foreign ownership and FDI have a strong presence here in the market. What percentage of Thai Samsung Life is foreign controlled?

CARDEN: We now have approval from the OIC to have 49% foreign ownership with our company, so we have done that. Before, the maximum ownership allowed was 25%. Thai Samsung Life is probably one of the first life insurance companies who have received approval from the OIC to go up to 49%. We also have a joint partnership with two different partners; one of our partners is the Saha Group, which is a well-known conglomerate, mostly in the manufacturing business here. Our second partner is Thanachart Bank. We, along with our two partners, make up Thai Samsung Life. Our goals are very coordinated in that we want to become a very strong life insurance company that gives high quality products to its customers, and is able to take advantage of the relationships that both The Saha Group and Thanachart Bank have with their clients. This synergy will only make us grow even faster than what we have planned.

The ASEAN Economic Community (AEC) liberalization measures coming online in 2015 will likely result in the consolidation of the Thai life insurance market. What are your M&A objectives going forward?

CARDEN: We do not really know exactly how the AEC measures will impact our industry art this stage. I was working in the UK when the European Economic Community (EEC) was forming. But in the end, financial services were prohibited from establishing cross border operations. Here in Thailand, we are looking at the AEC as a way to sell our financial products abroad and increase our distribution arena. However, there are many obstacles we must overcome. For example, what currency do we use? Do we trade in Baht, or do we trade in local currencies? If we trade in local currencies, we will need to purchase local bonds in that currency to match our liabilities. This could prove to be difficult. If a customer has a complaint, do they go to their local insurance regulator or do they complain to the Thailand OIC? If our agents are licensed in Thailand, does that mean they are automatically licensed in other AEC countries as well? In terms of capital flight of premiums, are we really going to let premiums that we collect here in Thailand be put outside into another AEC country? There are still many questions that must be answered before this conversion into the AEC market takes place.

However, we have been working under the assumption that this event will take place and the OIC has outlined a plan that other AEC countries will sell in Thailand only through Thai agents who are licensed here. For example, if there is a life company in Laos who wants to do business in Thailand, they will have to do business through a registered Thai agent here in Thailand. Additionally, there are some products that are approved here, but may not be approved in other countries. I think there is a lot more work to be done before all of this is finalized and I think we are a long way from implementing this event in the financial services area. Nevertheless, the opportunity to sell in all AEC countries and increase your distribution arena is really exciting to imagine.