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Thailand's Largest Life Insurer AIA Expand Investment Into Thailand Property Market

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American International Assurance (AIA), Thailand

American International Assurance (AIA), Thailand's largest life insurer, is keen to expand its investment into Thailand property market to make use of its massive 580 billion baht in investment assets.

"We've ample room for investment, and according to company policy we're committed to investing up to 5% of our investment assets," said Anucha Laokwansatit, the general manager and chief investment officer.

"But investment [in real estate] should just be supplementary assets, not the core, as a hedge against inflation or something that can offer long-term rental income."

AIA already invests in two large-scale real estate projects _ AIA Capital Center, a 35-storey commercial complex on Ratchadaphisek Road, and AIA Sathorn Tower, a 28-storey office complex in Bangkok.

AIA Capital Center is scheduled for completion by the end of 2014, while AIA Sathorn Tower will be finished in 2015.

Together they account for about 1% of the company's investment assets, which is second in size to the security fund and surpasses the government pension fund.

AIA has been active in real estate over the past five years after the Office of the Insurance Commission (OIC) allowed life insurers to invest up to 15% of their reserves in property.
Mr Anucha said the company has not decided on a new investment.

Government bonds and corporate debentures now control a majority of its investment, making up 75%, with 15% in securities and the rest in foreign government and state enterprise bonds.

Last year, AIA's investment yields were 5% excluding lucrative realised capital gains worth 10 billion baht. It had unrealised capital gains worth another 10 billion baht.

Mr Anucha said the company and its peers in the Thai Life Assurance Association are asking the OIC to expand investment in foreign corporate debentures given limited investment vehicles in Thailand, particularly for fixed-income instruments.

AIA's balance sheet last year reported net written premiums of 93.3 billion baht, up from 90.2 billion in 2010.

Total revenue was 118 billion baht, up from 114 billion in 2010.

AIA had a net profit of 17.6 billion baht last year, up from 9.36 billion in 2010.

"We foresee promising prospects this year due partially to our greater brand recognition because of supporting 29 soccer clubs in the Thai Premier League, Divisions 1 and 2, as well as the growing economy," he said.

Government bonds and corporate debentures control two thirds of AIA’s investment, with 15 per cent in securities and the remainder in foreign government and state enterprise bonds.

AIA, second in size to the security fund and larger than the government pension fund, reported investment yields of five per cent, last year. This figure did not account for lucrative realized gains worth THB 10 billion nor unrealised capital gains also valued at THB 10 billion US$ 3.2 million.

Tags: property, market, thailand, investment, company, life, largest, room, investing, policy, expand, committed

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