Rules for foreign ownership of life assurance companies in Thailand have changed

Background: Thailand has revised the criteria for foreign ownership of life insurance companies.

In this article, we explain the changes made.

Company ownership: Foreign ownership of a Thai life insurance company is capped at 49%, and the appointment of foreign directors is limited to a majority of the board in the following cases:

• The company operates in a manner that could harm the insured or the public, and either

(1)  the Thai insurance regulator has directed the company to improve its status or

adjust its capital, or 

(2)  the company’s actions may have a significant impact on the insurance industry, causing significant compensation burdens and affecting the company’s capital adequacy ratio;

• The life insurer’s shareholders are unable to increase capital; and

• The life insurer is unable to attract Thai investors to increase the capital necessary to ensure stability and the long-term operation of the business.

Qualifications of foreign shareholders: Foreign shareholders must comply with the following requirements:

• Be an insurance company, or have at least 10 years of relevant experience in the insurance industry 

• Demonstrate financial stability and possess a credit rating of “A” or higher from a reputable credit rating agency, or (or have a parent company with such a credit rating;

• Present a comprehensive business plan to develop and promote the company’s efficiency and competitiveness in the industry; and

• Be able to invest in the company’s capital by at least 2 billion Baht to maintain stability, with a CAR of at least 250%.

Comment: This is an interesting development to encourage foreign involvement in the life insurance sector. Prospective investors are advised to conduct full due diligence before making any investment decision.

Wissen and Co is a general corporate and commercial law firm.
For further information, please contact Stephen Frost by email at Stephen.f@wissenandco.com or telephone (66) 2 259 2627-9..