On June 2, 2022, Thailand’s Workplace of Insurance coverage Fee (OIC) issued Notification No. 6 Re: Investments in Different Enterprise Operations for each life and non-life insurance coverage corporations. The 2 notifications, which took impact upon issuance, strengthen the OIC’s supervision of investments by insurance coverage corporations, with a deal with primary infrastructure related to the promotion of enterprise competitors and sustainability, and likewise permit and regulate further funding sorts.
Inner Governance of Funding Actions
An insurance coverage firm’s board of administrators is required to nominate a credit score committee when participating in credit score actions. These actions embrace offering loans (excluding private loans to staff or loans made underneath a assure by its insurance coverage insurance policies), automobile leasing providers, avals for payments of change, and letters of assure for mission efficiency.
The credit score committee has the next duties:
- Making ready the credit score coverage framework for the credit score actions described above for additional board approval;
- Supervising the credit score actions;
- Overseeing good company governance, transparency, and prevention of battle of curiosity in relation to credit score actions;
- Guaranteeing that the work system, manpower, and information in relation to credit score actions are enough; and
- Commonly reporting to the board of administrators concerning credit score actions.
Credit score insurance policies should at the least cowl:
- Procedures and circumstances for credit score transactions. These embrace threat administration, inside controls, information storage, and written reporting necessities. The procedures and circumstances should adjust to the related OIC rules and the Financial institution of Thailand’s minimal requirements for monetary establishments.
- Individuals accountable for operations regarding credit score work, threat administration for credit score transactions, and verification of credit score transactions. These roles embrace (1) the credit score analyst, (2) the one who approves applicable credit score transactions, (3) the verifier of labor accuracy after a credit score transaction is accredited, (4) the individual in control of reporting credit score transaction dangers, and (5) the individual accountable for verifying credit score transactions and reporting this to the board of administrators. Roles 1, 2, and Four should not be the identical individual, and the workforce in control of roles 1 and a couple of should not be the identical because the workforce dealing with roles 3, 4, and 5.
The notifications permit further varieties of funding, as proven within the desk beneath.
The aggregated quantity of funding within the merchandise listed above is capped at 30% of the overall funding property of the corporate.
Funding in Syndicated Loans
The OIC notifications introduce syndicated loans as a brand new sort of permitted funding, and prescribe sure circumstances for the funding in syndicated loans for infrastructure companies. On this case, “infrastructure companies” refers to Thai government-owned infrastructure companies and infrastructure companies positioned within the ASEAN area.
Insurance coverage corporations are permitted to put money into syndicated loans for the next varieties of infrastructure companies:
- Rail or pipeline transportation methods;
- Electrical energy provide;
- Water provide;
- Airports or aerodromes;
- Deep water ports;
- Telecommunications or primary info and communication expertise infrastructure;
- Various power;
- Water administration methods;
- Pure catastrophe prevention methods, together with alarm and administration methods for mitigation of pure disasters;
- Waste disposal; and
- Mixtures of the infrastructure companies listed above.
To put money into syndicated loans, an insurance coverage firm should possess the next traits:
- Capital surplus of at the least THB 1 billion;
- Asset ratio of 110%;
- Capital adequacy ratio (CAR) for the newest 4 quarters of at the least 200%; and
- Ample methods to help credit-related transactions.
Different Compliance Issues
Along with the foundations for syndicated loans, the OIC notifications additionally prescribe guidelines for different varieties of funding.
Insurance coverage corporations that invested in loans, automobile leasing, avals, or ensures earlier than the issuance of the OIC notifications should additionally adjust to the brand new guidelines, together with appointing the credit score committee (or different), instituting a credit score coverage, making ready credit-related information, and refinancing, inside 180 days of the efficient date of the OIC notifications (i.e., late November 2022).