SMK share price plunges on Q1 losses

The share price of SET-listed Syn Mun Kong Insurance (SMK) plummeted yesterday after the company reported a loss of 29 billion baht in the first quarter.

SMK shares closed at 8.35 baht yesterday, down 3.55 baht or 29.8% from the previous day.

According to SMK’s financial statement filed to the Stock Exchange of Thailand (SET) on May 23, the company attributed the loss to surging claims and expenses from Covid insurance offering a lump-sum payment.

The company also saw its total expenses rise to 31.6 billion baht in the first quarter, up 29.4 billion or 1,313% from the same period last year.

This increase was attributed to a 23.3-billion-baht loss from Covid claims in the first quarter, a significant increase from 19.1 million in the same period last year.

The SET suspended trading of SMK shares on May 18 as the company failed to submit its financial statement for the first quarter of 2022 on time.

The bourse ended the suspension yesterday after the submission, but the huge loss and high uncertainty involving the company’s financial stability caused a heavy sell-off.

The value of SMK shareholders’ equity fell to below 50% of paid-up capital, causing the SET to put the “caution” or C sign on the equity to warn investors of the company’s financial difficulties and oblige them to trade the stocks using cash balance accounts.

Compounded by the huge loss, the company’s total liabilities now exceed total assets of 27.2 billion baht, causing the company’s fund reserve to diminish and fall below the capital maintenance criteria.

As of March 31, SMK had 35.2 billion baht in liabilities from insurance contracts, comprising a compensation reserve of 23.9 billion baht, unearned premium reserves of 4.6 billion baht and unexpired risk reserves of 6.38 billion baht.

There were about 1.3 million active Covid insurance policies in the first quarter, 99% of which expire in April 2022.

As the accumulated value of Covid claims continues to climb, the company submitted a rehabilitation petition to the Central Bankruptcy Court on May 17 to solve its liquidity issues.

The court is scheduled to submit a business rehabilitation petition to creditors around June and schedule a hearing to garner data for the petition on Aug 15. If the petition is approved by the court, the company is expected to resume paying claims in June 2023.

SMK aims to find new venture partners to raise capital and pay debts through the rehabilitation plan, rather than close the business.

The Finance Ministry has revoked the licences of four firms that suffered losses from Covid insurance: Asia Insurance, The One Insurance, Southeast Insurance and Thai Insurance.

The loss was due to surging claims and expenses from Covid insurance offering a lump-sum payment. SYN MUN KONG INSURANCE Financial statement to SET