Muang Thai Life’s Profitability Set for Medium-Term Recovery
Fitch Ratings anticipates a continued recovery in the profitability of Muang Thai Life Assurance (MTL) in the medium term. The rating agency also expects the insurer’s capitalization to remain stable in 2025.
MTL maintains a substantial market share, holding approximately 11% of total premium income. This position is bolstered by operational support from its major shareholders, KASIKORNBANK (KBank) and Ageas Insurance International.
Capitalization remains robust, with the Risk-Based Capital (RBC) ratio improving to 381% at the end of the third quarter of 2024. This is well above Thailand’s regulatory requirement of 140%. Fitch projects stable capitalization for MTL in 2025, following a reduction in financial leverage to 9.5% due to the partial repayment of $100 million in subordinated debt last year.
MTL’s profitability is showing gradual improvement. The annualised Return on Equity (ROE) reached 6.9% for the first nine months of 2024, compared to 6.6% in 2023. Fitch expects further improvements in new business value. These improvements are expected to be aided by industry-wide adjustments to manage medical inflation. This includes the adoption of co-payment models and product repricing. Growth opportunities stemming from the partnership with KBank, along with efficiency gains from digital transformation, are also expected to support earnings.
However, MTL’s investment portfolio remains heavily weighted towards risky assets. The risky asset ratio stood at 237% at the end of the third quarter of 2024. This exposure is driven by holdings in equities, below-investment-grade bonds, and sovereign bonds. The sovereign investments-to-capital ratio was at 320% as of the same period.
