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Thanasin Insurance's Future Rests With Chinese Partner

Jun 25, 2007

By Bangkok Post, Thailand

Jun. 26--The future of troubled Thanasin Insurance now hinges on its Chinese partner, TSB Trading Co, now that property tycoon Boon Vanasin has decided to back away from a deal.

"I am committed to investing no more than 400 million baht in Thanasin, but the company has been found to need up to 560 million baht to cover its liabilities," said Dr Boon, who earlier had offered to lead a group with Chinese partners to rescue the debt-ridden firm.

However, Dr Boon said he would still be active in advising the Chinese if they wanted to pursue a deal for Thanasin, whose main business is car insurance.

In mid-March, the Insurance Department ordered Thanasin to suspend operations after it failed to maintain capital funds as required by law.

Capital funds are a portion of assets in excess of the insurer's liabilities in accordance with their appraised value. Under the Non-Life Insurance Act, general insurers must maintain capital funds equivalent to 10 percent of earned premiums, but not less than 30 million baht.

Last month, TSB Trading Co, which is associated with Dr Boon, pledged to inject 200 million baht in cash and 350 million in property. It would convert the property into cash within 60 days after the June 10 deadline.

All proceeds would go toward increasing the company's capital funds and settling outstanding claims.

Thanasin Insurance's capital funds were said to be between 400 million and 500 million baht short, with outstanding claims exceeding 40 million baht, excluding unpaid bills to garages.

Deputy Commerce Minister Oranuj Osathananda said yesterday that Thanasin had yet to come up with 200 million baht in cash on the June 22 deadline set by regulators, as it had promised.

But she said that no orders to close Thanasin or revoke its licence had yet been issued, given the fact that the company at least had been able to set aside 36 million baht to pay claims.

Of the 36 million baht, some 26 million baht was from a group of new investors led by TSB.

Ms Oranuj said any definitive ruling on whether to close Thanasin needed thorough and cautious consideration, as the closure would affect both the economy and Thanasin's customers.

Thanasin yesterday submitted the latest version of its business rehabilitation plan to the Commerce Ministry.

Chumluang Chatsuwan, the deputy director-general of the Insurance Department, said the department would closely assess the company's ability to secure 200 million baht in cash.

The deputy director-general said that apart from Thanasin Insurance, the department was closely monitoring the financial status of Saha Life Insurance, a small firm controlled by a group of co-operatives, and Sampahn Insurance.

By Charoen Kittikanya and Phusadee Arunmas

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Copyright (c) 2007, Bangkok Post, Thailand

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