Abstract
Thailand' s susceptibility to the swift downturn in the global economy is
beyond dispute, and the spectre of
an agonising and possibly protracted
recession is looming ever larger. A string of macroeconomic data
released
in late January firmed our expectations of a negative growth print for the
final quarter of 2008
and the probability of the economy dipping into
recession in 2009. Perhaps the most eye-catching metric
released was the
manufacturing production index, growth of which fell by a swingeing 18.8%
year-onyear
(y-o-y), driven by a synchronised downturn in both external
and domestic demand, with contractions
registered in most
sub-categories.
Industrial capacity utilisation continued to edge lower in
December too, registering 58.9%, down from 61.2%
in the preceding month
(where 100% represents full capacity). With the manufacturing sector
employing
some 6mn people, the consequences of a continued pull-back are
evident. Surprisingly, the Bank of
Thailand (BoT)' s business sentiment
index perked up gently in December, to 36.9 (from 34.4 in November).
However, this is likely attributable to the restoration of relative political
stability and similar bounces in
purchasing manager indexes across the
globe, and should probably not be construed as an embryonic trend
reversal. Indeed, retrenchment is likely to remain the name of the game for
some time to come.
On the external front, exports continued to shrink in
December by 15.7% y-o-y, compounding the 17.7%
decline recorded in the
previous month. Meanwhile import growth fell into negative territory,
contracting
by 8.8% y-o-y, from a paltry but positive 0.2% in November.
The falling international price of oil played a
key role here, as did
faltering demand for raw materials and intermediate goods (linked in turn to
the
bleaker outlook for exports). This resulted in a positive trade
balance of US$496mn (from minus US$896
in the prior month), and helped
bring the current account into the black, at US$91mn (from a negative
US$935mn in November). Indeed, although the parallel fall in exports and
imports means that the trade
account should remain fairly stable, we are
concerned about the effects of falling exports on private sector
investment.
In the Asia Pacific, we profile 23 companies. These are AEGON,
AIG, Allianz, Aviva, AXA, Cardif,
Fortis, Generali, Groupama, HDI-Gerling,
HSBC Insurance, ING Group, Liberty Mutual,
Manulife, MetLife, Prudential
Financial, Prudential plc, QBE, RSA, Sun Life Financial, The
Hartford,
Principal Financial Group and Zurich Financial Services.
We also look at
various local firms that are active in the region; some of these companies
rank, in terms
of the premiums that they write, among the largest in the
world.
Over the course of 2008, actual total premiums in Thailand rose by
12% to THB339,974mn. Non-life
premiums rose by 6% to THB106,083mn, while
life premiums rose by 16% to THB233,891mn.
Between now and the end of the
forecast period, we expect that annual non-life premiums will rise by
THB37,005mn, while annual life premiums should rise by THB148,199mn. Growth in
non-life premiums
should be driven by the general growth of nominal GDP
plus a rise in non-life penetration from the
current level of 1.15% to
1.30%.
Growth in life premiums should be driven by the change in the
overall population and a rise in life
density from US$92.09 to US$200.00
per capita.
BMI' s Insurance Business Environment Rating is 57.9
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