12. Financial position

12.1 Financial Statement

(1) Comment of the Auditor

For the last 3 years, the auditor has accepted the financial statement
without any condition.

(2) Auditor’s significant policy for 2000

a. Revenue Recognition

The Company recognizes its revenues on an accrual basis.

b. Expense Recognition

Unearned premium reserve

-   40 % of net premium written are appropriated for a reserve in
    accordance with the Revenue Code.

-   are recognised generally on an accrual basis, except the specific
    business tax which is recognised on a cash basis.

c. Investment in Securities

  From January 1, 1999 the Company has adopted the Thai Accounting
  Standard No. 40 Accounting for Investment in Debt and Equity
  Securities.

+------------------+---------------------------------------------------+
| Securities for   | - stated at fair value. Unrealized gain (loss) on |
| trading          | change in value of investment is included as      |
|                  | income or expenses in the Statement of Income.    |
+------------------+---------------------------------------------------+
| Securities       | - stated at fair value. Unrealized gain (loss) on |
| available for    | change in value of investment is recorded as a    |
| sale             | separate item in shareholders' equity until       |
|                  | securities are sold, the change shall be included |
|                  | in the Statement of Income.                       |
+------------------+---------------------------------------------------+
| Debt instruments | - stated at amortized cost adjusted by the        |
| to               | investment impairment, decrease in that           |
|                  | investment is charged as an expense to the        |
| be held to       | statement of income                               |
| maturity         |                                                   |
+------------------+---------------------------------------------------+
| Other securities | - stated at cost adjusted by the investment       |
|                  | impairment, decrease in that investment is        |
|                  | charged as an expense to the statement of income  |
+------------------+---------------------------------------------------+

  Cost of the securities for trading and available for sale which are
  sold during the period are valued at the weighted-average method.

d. Allowance for Doubtful Accounts

  The Company provides allowance for doubtful accounts for premium
  receivables, loans, advances and other receivables on the basis of
  debts collection experience, review of current status of debts and the
  appraised value of collateral securities of each account.

e. Premises and Equipment

  Premises and equipment are stated at cost. Cost is measured by
  purchase value and cost of obtaining the assets and of bringing it to
  the condition necessary for its intended use. Premises and equipment,
  except land, are presented at cost net of accumulated depreciation.

Depreciation and amortisation are calculated by the methods as follows:

  - Assets acquired prior to January 1, 1999 are depreciated by the
  declining balance method at 5% to 20% per year.

  - Assets acquired from January 1, 1999 onward are depreciated by the
  straight line method over their estimated useful lives ranging from 5
  to 20 years.

  The Company treated the expenses in connection with the increase of
  its share capital in 1994 amounting to 11.166 million baht as deferred
  expenses which were amortised by the straight-line method in 5 years.
  The deferred expenses were fully amortised in the year ended December
  31, 1999.

f. Reclassification of Accounts

  The Company has reclassified certain accounts in the balance sheet as
  at December 31, 2000 and the statement of income and the statement of
  cash flows for the year 2000 to conform to the presentation of the
  financial statements for the year 2001. This reclassification has no
  effects on the profit from operation and the financial position.

(3) Summarized Financial Statements

(Million baht)

  ------------------------------------ ----------- ----------- -----------
                                       2001        2000        1999

  Gross Premium written                691.44      855.59      799.78

  Net premium                          578.16      771.04      717.74

  Earned premium                       655.31      749.72      670.19

  Income on underwriting               49.86       49.14       53.37

  Other incomes                        10.98       5.63        1.10

  Total expenses                       714.91      807.69      670.55

  Net profit                           1.24        -10.71      51.22

  EPS (Baht)                           0.09        -0.77       3.68

  No. of shares (million share)        13.90       13.90       13.90

  Total assets                         1,378.92    1,496.46    1,507.93

  Total liabilities                    587.22      709.58      687.34

  Equity                               791.70      786.87      820.59

  Book value                           56.96       56.61       59.04
  ------------------------------------ ----------- ----------- -----------

Dividend payment

(baht)

  ------------------------------------ ----------- ----------- -----------
                                       2001        2000        1999

  Dividend per shares1/                n/a         0.00        2.75

  EPS                                  0.09        -0.77       3.68

  PAR                                  10.00       10.00       10.00

  PAYOUT RATIO (%)                     n/a         0.00        74.63
  ------------------------------------ ----------- ----------- -----------

  Note: 1/ The dividend for the year 2001 will be considered in the
  general meeting of the shareholders.

RATIO ANALYSIS

+-------------------------------------+-------+-------+-------+-------+
|                                     |       | 2001  | 2000  | 1999  |
+-------------------------------------+-------+-------+-------+-------+
| LIQUIDITY RATIO                     |       |       |       |       |
+-------------------------------------+-------+-------+-------+-------+
| CURRENT RATIO                       | (T    | 0.90  | 0.90  | 1.32  |
|                                     | IMES) |       |       |       |
+-------------------------------------+-------+-------+-------+-------+
| PREMIUM RECEIVABLE TURNOVER         | (     | 1     | 1     | 1     |
|                                     | DAYS) | 32.50 | 31.64 | 34.59 |
+-------------------------------------+-------+-------+-------+-------+
| PROFITABILITY RATIO                 |       |       |       |       |
+-------------------------------------+-------+-------+-------+-------+
| NET PREMIUM / EARNED PREMIUM        | (%)   | 88.23 | 1     | 1     |
|                                     |       |       | 02.84 | 07.10 |
+-------------------------------------+-------+-------+-------+-------+
| LOSS RATIO                          | (%)   | 64.45 | 61.74 | 55.57 |
+-------------------------------------+-------+-------+-------+-------+
| PROFIT ON UNDERWRITTING TO NET      | (%)   | 22.49 | 20.18 | 24.72 |
| PREMIUM WRITTEN                     |       |       |       |       |
+-------------------------------------+-------+-------+-------+-------+
| EXPENSE RATIO                       | (%)   | 41.15 | 43.01 | 41.64 |
+-------------------------------------+-------+-------+-------+-------+
| INVESTMENT YIELD                    | (%)   | 5.61  | 5.18  | 5.73  |
+-------------------------------------+-------+-------+-------+-------+
| NET PREMIUM WRITTEN TO CAPITAL FUND | (T    | 0.73  | 0.96  | 0.88  |
|                                     | IMES) |       |       |       |
+-------------------------------------+-------+-------+-------+-------+
| NET PROFIT MARGIN                   | (%)   | 0.15  | -1.11 | 5.57  |
+-------------------------------------+-------+-------+-------+-------+
| RETURN ON EQUITY                    | (%)   | 0.16  | -1.33 | 6.30  |
+-------------------------------------+-------+-------+-------+-------+
| EFFICIENCY RATIO                    |       |       |       |       |
+-------------------------------------+-------+-------+-------+-------+
| RETURN ON TOTAL ASSET               | (%)   | 0.09  | -0.71 | 3.50  |
+-------------------------------------+-------+-------+-------+-------+
| ASSET TURNOVER                      | (T    | 0.57  | 0.64  | 0.63  |
|                                     | IMES) |       |       |       |
+-------------------------------------+-------+-------+-------+-------+
| FINANCIAL POLICY RATIO              |       |       |       |       |
+-------------------------------------+-------+-------+-------+-------+
| DEBT TO EQUITY                      | (T    | 0.74  | 0.90  | 0.84  |
|                                     | IMES) |       |       |       |
+-------------------------------------+-------+-------+-------+-------+
| POLICY LIABILITY TO CAPITAL FUND    | (T    | 0.56  | 0.71  | 0.64  |
|                                     | IMES) |       |       |       |
+-------------------------------------+-------+-------+-------+-------+
| POLICY RESERVE TO CAPITAL FUND      | (T    | 0.29  | 0.39  | 0.35  |
|                                     | IMES) |       |       |       |
+-------------------------------------+-------+-------+-------+-------+
| POLICY RESERVE TO TOTAL ASSETS      | (T    | 0.17  | 0.21  | 0.19  |
|                                     | IMES) |       |       |       |
+-------------------------------------+-------+-------+-------+-------+
| PAYOUT RATIO                        | (%)   | n/a   | n/a   | 74.63 |
+-------------------------------------+-------+-------+-------+-------+

  Note: 1/ Current Ratio = Current Assets / Current Liabilities

  2/ The dividend for the year 2000 will be considered in the general
  meeting of the shareholders.

Balance Sheet 

Years ended December 31,

(1,000 baht)

  ---------------------------- ----------- --------- ----------- --------- ----------- ---------
                               2001                  2000                  1999        

                               Amount      %         Amount      %         Amount      %

  ASSETS                                                                               

  INVESTMENT IN SECURITIES                                                             

  Bonds                        122,157     8.86%     168,162     11.24%    89,808      5.96%

  Stocks                       67,233      4.88%     64,882      4.34%     38,155      2.53%

  Debentures                   125,618     9.11%     103,858     6.94%     75,408      5.00%

  Notes                        127,264     9.23%     149,276     9.98%     165,000     10.94%

  Other securities             235,104     17.05%    200,970     13.43%    48,931      3.24%

  Sub-total                    677,376     49.12%    687,148     45.92%    417,301     27.67%

  Less Allowance for declining 26,967      1.96%     26,942      1.80%     23,915      1.59%
  value of the securities                                                              

  Total investment in          650,409     47.17%    660,206     44.12%    393,386     26.09%
  securities                                                                           

  LOANS                                                                                

  Securities guaranteed loans  104,120     7.55%     126,349     8.44%     147,034     9.75%

  Other loans                  2,598       0.19%     2,995       0.20%     2,998       0.20%

  Total loans                  106,717     7.74%     129,344     8.64%     150,032     9.95%

  Less Allowance for doubtful  12,177      0.88%     18,261      1.22%     7,237       0.48%
  accounts                                                                             

  Total loans (net)            94,540      6.86%     111,083     7.42%     142,795     9.47%

  CASH AND DEPOSITS AT         144,035     10.45%    177,968     11.89%    395,941     26.26%
  FINANCIAL INSTITUTIONS                                                               

  PREMISES AND EQUIPMENT, NET  199,821     14.49%    196,019     13.10%    198,878     13.19%

  AMOUNT DEPOSIT ON            15          0.00%     117         0.01%     173         0.01%
  REINSURANCE TREATIES                                                                 

  DUE FROM REINSURERS          11,076      0.80%     7,643       0.51%     4,502       0.30%

  PREMIUM DUE AND UNCOLLECTED  179,492     13.02%    277,160     18.52%    285,440     18.93%

  NOTES RECEIVABLE             5,376       0.39%     4,451       0.30%     13,892      0.92%

  ACCRUED INCOME ON INVESTMENT 6,040       0.44%     6,306       0.42%     7,414       0.49%

  OTHER ASSETS                                                                         

  Advance                      6,798       0.49%     12,749      0.85%     29,167      1.93%

  Postdate cheque from agent   28,126      2.04%     8,046       0.54%     0           0.00%

  Recoverable balance from     9,048       0.66%     9,754       0.65%     22,379      1.48%
  default party                                                                        

  Others                       44,147      3.20%     24,957      1.67%     13,963      0.93%

  TOTAL ASSETS                 1,378,923   100.00%   1,496,458   100.00%   1,507,932   100.00%
  ---------------------------- ----------- --------- ----------- --------- ----------- ---------

Balance Sheet (Continued)

Years ended December 31,

(1,000 baht)

  ----------------------------- ----------- --------- ----------- --------- ----------- ---------
                                2001                  2000                  1999        

                                Amount      %         Amount      %         Amount      %

  LIABILITIES AND SHAREHOLDERS'                                                         
  EQUITY                                                                                

  UNEARNED PREMIUM RESERVE      231,262     39.38%    308,417     43.46%    287,096     41.77%

  LOSS RESERVE AND OUTSTANDING  209,116     35.61%    250,132     35.25%    240,936     35.05%
  CLAIMS : NON-LIFE INSURANCE                                                           

  AMOUNT WITHHELD ON            38,139      6.49%     26,888      3.79%     26,356      3.83%
  REINSURANCE TREATIES                                                                  

  DUE TO REINSURERS             4,427       0.75%     7,576       1.07%     13,501      1.96%

  BANK OVERDRAFT AND LOANS FROM 19,655      3.35%     4,695       0.66%     5,754       0.84%
  FINANCIAL INS.                                                                        

  OTHER LIABILITIES                                                                     

  Commission payable            38,504      6.56%     57,122      8.05%     59,004      8.58%

  Others                        46,120      7.85%     54,753      7.72%     54,693      7.96%

  Total liabilities             587,222     100.00%   709,584     100.00%   687,339     100.00%

  SHAREHOLDERS' EQUITY                                                                  

  Share capital                 200,000     14.50%    200,000     13.36%    200,000     13.26%

  Issued and paid-up share      139,000     10.08%    139,000     9.29%     139,000     9.22%
  capital                                                                               

  Premium on share capital      594,437     43.11%    594,437     39.72%    594,437     39.42%

  Retained earnings :                                                                   

  Appropriated                                                                          

  Legal reserve                 24,849      1.80%     24,849      1.66%     24,849      1.65%

  Others                        6,164       0.45%     6,164       0.41%     5,449       0.36%

  Unappropriated                31,895      2.31%     30,652      2.05%     59,448      3.94%

  Sub-total                     796,344     57.75%    795,102     53.13%    823,182     54.59%

  Less Unrealized loss on       4,643       0.34%     8,227.44    0.55%     2,589.93    0.17%
  marketable equity securities                                                          

  Total shareholders' equity    791,701     57.41%    786,874     52.58%    820,593     54.42%

  TOTAL LIABILITIES &           1,378,923   100.00%   1,496,458   100.00%   1,507,932   100.00%
  SHAREHOLDERS' EQUITY                                                                  
  ----------------------------- ----------- --------- ----------- --------- ----------- ---------

STATEMENT OF INCOME

Years ended December 31,

  (1,000 baht)

+------------------------------+------+-----+------+-----+-----+-----+
|                              | 2001 |     | 2000 |     | 1   |     |
|                              |      |     |      |     | 999 |     |
+------------------------------+------+-----+------+-----+-----+-----+
|                              | Am   | %   | Am   | %   | Amo | %   |
|                              | ount |     | ount |     | unt |     |
+------------------------------+------+-----+------+-----+-----+-----+
| UNDERWRITING INCOME          |      |     |      |     |     |     |
+------------------------------+------+-----+------+-----+-----+-----+
| Premium written              | 755  | 1   | 912  | 1   | 8   | 1   |
|                              | ,740 | 00. | ,156 | 00. | 64, | 00. |
|                              |      | 00% |      | 00% | 298 | 00% |
+------------------------------+------+-----+------+-----+-----+-----+
| Less Premium ceded and       | 177  | 23. | 141  | 15. | 1   | 16. |
| cancelled and refunded       | ,584 | 50% | ,113 | 47% | 46, | 96% |
|                              |      |     |      |     | 559 |     |
+------------------------------+------+-----+------+-----+-----+-----+
| Net premium received         | 578  | 76. | 771  | 84. | 7   | 83. |
|                              | ,156 | 50% | ,043 | 53% | 17, | 04% |
|                              |      |     |      |     | 739 |     |
+------------------------------+------+-----+------+-----+-----+-----+
| Less Unearned premium        | -77  | -   | 21   | 2.  | 47, | 5.  |
| reserve increase (decrease)  | ,155 | 10. | ,322 | 34% | 552 | 50% |
| from previous year           |      | 21% |      |     |     |     |
+------------------------------+------+-----+------+-----+-----+-----+
| Total income on underwriting | 655  | 86. | 749  | 82. | 6   | 77. |
|                              | ,311 | 71% | ,722 | 19% | 70, | 54% |
|                              |      |     |      |     | 187 |     |
+------------------------------+------+-----+------+-----+-----+-----+
| UNDERWRITING EXPENSES        |      |     |      |     |     |     |
+------------------------------+------+-----+------+-----+-----+-----+
| Losses incurred              | 422  | 55. | 462  | 50. | 3   | 43. |
|                              | ,350 | 89% | ,915 | 75% | 72, | 09% |
|                              |      |     |      |     | 416 |     |
+------------------------------+------+-----+------+-----+-----+-----+
| Losses adjustment expenses   | 22   | 2.  | 22   | 2.  | 18, | 2.  |
|                              | ,318 | 95% | ,191 | 43% | 148 | 10% |
+------------------------------+------+-----+------+-----+-----+-----+
| Commissions and brokerages   | 75   | 10. | 103  | 11. | 95, | 11. |
|                              | ,635 | 01% | ,659 | 36% | 224 | 02% |
+------------------------------+------+-----+------+-----+-----+-----+
| Other expenses               | 4    | 0.  | 5    | 0.  | 6,  | 0.  |
|                              | ,985 | 66% | ,335 | 58% | 949 | 80% |
+------------------------------+------+-----+------+-----+-----+-----+
| Total expenses on            | 525  | 69. | 594  | 65. | 4   | 57. |
| underwriting                 | ,288 | 51% | ,100 | 13% | 92, | 01% |
|                              |      |     |      |     | 737 |     |
+------------------------------+------+-----+------+-----+-----+-----+
| INCOME ON UNDERWRITING       | 130  | 17. | 155  | 17. | 1   | 20. |
|                              | ,023 | 20% | ,622 | 06% | 77, | 53% |
|                              |      |     |      |     | 450 |     |
+------------------------------+------+-----+------+-----+-----+-----+
| INCOME ON INVESTMENT         |      |     |      |     |     |     |
+------------------------------+------+-----+------+-----+-----+-----+
| Interest and dividends       | 37   | 4.  | 40   | 4.  | 55, | 6.  |
|                              | ,679 | 99% | ,312 | 42% | 851 | 46% |
+------------------------------+------+-----+------+-----+-----+-----+
| Gain (loss) on securities    | 5    | 0.  | 5    | 0.  | -4, | -0. |
| trading                      | ,018 | 66% | ,786 | 63% | 045 | 47% |
+------------------------------+------+-----+------+-----+-----+-----+
| Other income                 | 7    | 0.  | 3    | 0.  | 1,  | 0.  |
|                              | ,166 | 95% | ,041 | 33% | 564 | 18% |
+------------------------------+------+-----+------+-----+-----+-----+
| Total income on investment   | 49   | 6.  | 49   | 5.  | 53, | 6.  |
|                              | ,863 | 60% | ,139 | 39% | 370 | 17% |
+------------------------------+------+-----+------+-----+-----+-----+
| INVESTMENT EXPENSES          | 575  | 0.  | 119  | 0.  | 937 | 0.  |
|                              |      | 08% |      | 01% |     | 11% |
+------------------------------+------+-----+------+-----+-----+-----+
| Income on investment         | 49   | 6.  | 49   | 5.  | 52, | 6.  |
|                              | ,288 | 52% | ,020 | 37% | 433 | 07% |
+------------------------------+------+-----+------+-----+-----+-----+
| Income on underwriting and   | 179  | 23. | 204  | 22. | 2   | 26. |
| investment                   | ,311 | 73% | ,642 | 43% | 29, | 60% |
|                              |      |     |      |     | 883 |     |
+------------------------------+------+-----+------+-----+-----+-----+
| OTHER INCOME                 | 10   | 1.  | 5    | 0.  | 1,  | 0.  |
|                              | ,975 | 45% | ,628 | 62% | 097 | 13% |
+------------------------------+------+-----+------+-----+-----+-----+
| OPERATING EXPENSES           | 189  | 25. | 213  | 23. | 1   | 20. |
|                              | ,044 | 01% | ,475 | 40% | 76, | 46% |
|                              |      |     |      |     | 878 |     |
+------------------------------+------+-----+------+-----+-----+-----+
| INCOME (LOSS) BEFORE INCOME  | 1    | 0.  | -3   | -0. | 54, | 6.  |
| TAX                          | ,242 | 16% | ,205 | 35% | 103 | 26% |
+------------------------------+------+-----+------+-----+-----+-----+
| INCOME TAX                   | 0    | 0.  | 7    | 0.  | 2,  | 0.  |
|                              |      | 00% | ,501 | 82% | 883 | 33% |
+------------------------------+------+-----+------+-----+-----+-----+
| NET INCOME (LOSS)            | 1    | 0.  | -10  | -1. | 51, | 5.  |
|                              | ,242 | 16% | ,706 | 17% | 220 | 93% |
+------------------------------+------+-----+------+-----+-----+-----+
| Earnings (loss) per share    | 0.09 |     | -    |     | 3   |     |
|                              |      |     | 0.77 |     | .68 |     |
+------------------------------+------+-----+------+-----+-----+-----+

STATEMENT OF CASH FLOWS

Years ended December 31,

  (1,000 baht)

  --------------- ---------------------------------------------- --------- ---------- ----------
                                                                 2001      2000       1999

  Cash flows from                                                                     
  operating                                                                           
  activities                                                                          

                  Net income                                     1,242     -10,706    51,220

                  Adjustments to reconcile net income to net                          
                  cash provided (used) by operating activities :                      

                  Depreciation and amortization                  10,220    9,737      14,240

                  Loss (Gain) on sales of marketable equity      -8,627    -3,176     4,045
                  securities                                                          

                  Loss (Gain) on sales of fixed assets           -45       -1,964     331

                  Unrealized loss (gain) from investment         3,609     -2,610     0

                  Doubtful debts                                 2,801     31,242     0

                  Decrease (Increase) in operating assets :                           

                  Amount deposit on reinsurance treaties         102       55         -68

                  Dues from reinsurers                           -3,433    -3,140     -2,081

                  Premium due and uncollected                    93,942    11,190     -28,130

                  Accrued income on investment                   266       1,109      -860

                  Advance                                        5,951     16,419     -10,841

                  Postdate cheque from agent                     -20,080   -8,046     0

                  Recoverable balance from default party         705       5,545      3,331

                  Others                                         -19,190   -11,165    -8,204

                  Increase (Decrease) in operating liabilities :                      

                  Unearned premium reserve                       -77,155   21,322     47,552

                  Loss reserves and outstanding claims :         -41,017   9,196      1,747
                  non-life insurance                                                  

                  Amount withheld on reinsurance treaties        11,251    531        -1,612

                  Due to reinsurers                              -3,149    -5,925     -2,190

                  Commission payable                             -18,618   -1,882     6,067

                  Others                                         -8,634    61         20,289

                  Net Cash Provided by Operating Activities      -69,857   57,792     94,836

  Cash flows from                                                                     
  investing                                                                           
  activities :                                                                        

                  Decrease (Increase) in bonds                   49,036    -77,598    -24,171

                  Decrease in stocks                             1,407     -25,327    -7,867

                  Decrease (Increase) in debentures              -21,600   -28,000    -27,000

                  Decrease in notes                              22,012    15,724     -105,000

                  Decrease (Increase) in other securities        -32,456   -151,470   -32,577

                  Increase in loans                              16,543    15,624     7,334

                  Deposits at financial institutions             30,126    -31,876    0

                  Proceeds from sale of fixed assets             1,200     4,097      142

                  Purchase of fixed assets                       -15,177   -9,010     -17,542

                  Net Cash provided by Investing Activities      51,092    -287,837   -206,680

  Cash flows from                                                                     
  financing                                                                           
  activities :                                                                        

                  Decrease in bank overdrafts                    14,959    -1,058     3,275

                  Dividends paid                                 0         -17,375    -45,175

                  Directors' remuneration paid                   0         0          -650

                  Net Cash Used by Financing Activities          14,959    -18,433    -42,550

  Net Increase                                                             -3,806     -248,478
  (Decrease) in                                                                       
  Cash and Cash                                                                       
  Equivalents                                                                         

  Cash and Cash                                                            28,949     277,428
  Equivalents -                                                                       
  beginning of                                                                        
  the years                                                                           

  Cash and Cash                                                            25,143     28,949
  Equivalents -                                                                       
  end of the                                                                          
  years                                                                               
  --------------- ---------------------------------------------- --------- ---------- ----------

12.2 Financial Status and Operational Performance

(1) Gross Premiums

  The gross premiums for 2001 amounting to Baht 691.44 million, a 19.19%
  decrease over 2000, as company carefully underwrite policies, to
  forestall high level of loss ratios.

(2) Investment income and other incomes

  Income on investment and other incomes for 2001 amounted to Baht 49.28
  million, a 0.55% increase over 2000. The other incomes amounted to
  Baht 10.98 million, a 95.01% increase, as the debtors, for which the
  company had provided allowances repaid or paid the company in cash or
  by properties. As a result, the allowances decreased, thus increasing
  the other incomes.

(3) Expenses

  Underwriting expenses amounted to Baht 525.29 million, a 11.58%
  decrease over 2000, because the company has controlled the expenses,
  whereas still performing claim services in compliance with the
  insurance contracts done with clients.

  Operating expenses in 2001 amounted to Baht 189.04 million, a 11.44%
  decrease over 2000, mainly due to Baht 25.55 million decrease in the
  bad debt and doubtful accounts expenses, as the company has encouraged
  debtors to repay or pay money.

(4) Net Profit and Return on Equity

  Net Profit for 2001 was Baht 1.24 million and better than Baht 10.71
  million net loss for 2000 because the expenses decreased and the other
  incomes increased as mentioned above.

  The ratio of profit on underwriting to net premium written, net profit
  over earned premium and return of equity increased from 20.18%, -1.11%
  and –1.33% in 2000 to 22.49%, 0.15% and 0.16% in 2001 respectively.

  Generally, the pay off ratio for dividend is 60%. The dividend payment
  for 2001 will be finally considered by the general meeting of the
  shareholders.

(5) The projection in the disclosure for the sale of securities

  The company did not submit the disclosure for the sale of securities
  in the previous year.

12.3 Financial position

12.3.1 Assets

(1) Composition of assets

  As at the end of 2001, total investment in securities, net loans, cash
  and deposits, premises and equipment, premium due and other assets
  amounted to Baht 650.41, 94.54, 144.04, 199.82, 179.49 and 88.12
  million respectively equivalent to 47.17%, 6.86%, 10.45%, 14.49%,
  13.02% and 6.39% of the total assets. The assets with significant
  changes were as follows:

(a) The proportion of premiums due decreased from 18.50% of total assets
    as of the end of 2000 to 13.02% of total assets as of the end of
    2001, because the company has encouraged debtors to pay money.

(b) The proportion of securities increased from 44.06% of total assets
    as of the end of 2000 to 47.17% of total assets as of the end of
    2001, because the company has tried to reduce the proportion of
    assets without returns, thus increasing the proportion of the assets
    which produces returns.

(c) The proportion of other assets increased from 3.71% of total assets
    as of the end of 2000 to 6.39% as of the end of 2001, as some
    debtors repaid the company with properties. Moreover postdate
    cheques from agents increased.

(2) The quality of assets

(a) Loans and debtors

  The company aims to diversify assets in the lending portfolio not to
  concentrate in any industry or any client. The details of aging of
  loans and other debtors, the allowances for doubtful accounts and the
  company’s policy have been mentioned already. The company stops
  recognizing interest revenue on loans, when they are due for more than
  3 months, amounting to Baht 58.26 million.

(b) Investment assets

  The company aims to diversify associated risks, and made allowance for
  the devaluation of securities in accordance with the accounting
  standard, amounting to Baht 26.5 million, a decrease of Baht 0.65
  million over 2000.

  We believe that as the market has been volatile, returns on investment
  at the yield of 5.6% is acceptable.

12.3.2 Liquidity

(1) Net cashflow from operating activities in 2001 amounted to Baht
    –69.86 million, whereas net income for the reported period was Baht
    1.24 million. The difference occurred, because the company’s some
    revenues were not cash, such as Baht 12.34 million of properties
    with which debtors pay the company. Besides the Baht 578.16 million
    net premium written for 2001 was lower than total underwriting
    income by Baht 77.15 million, cash premiums received therefore were
    lower than the total underwriting income.

(2) Although current ratio as of the end of 2001 was 0.90 time, the
ratio of current assets plus marketable securities over current
liabilities was 1.28 times, indicating that we have adequate liquidity,
and the short-term liabilities were compatible with short-term assets.

12.3.3 Source of fund

(1) Suitability of source of fund

Debt to equity ratio as of the end of 2001 was 0.74 time which was lower
than the same ratio of 0.90 time as of the end of 2000, and much lower
than the insurance industry’s average figure of 1.24 times.

Regarding the capital adequacy, according to the non-life insurance act
B.E. 2535, any non-life insurance company has to maintain the capital at
least 10% of net premiums written. Our capital, as appraised by the
Department of Insurance at the end of 2000 was 90.75% of net premium
written. The mentioned ratio was above what stated by the act
significantly.

(2) Equity

Equity as of the end of 2001 amounted to Baht 791.70 million, an
increase of Baht 4.83 million over 2000. It increased because of the
additional operation profit.

(3) Liabilities

As of the end of 2001, the company has opend overdraft accounts with
financial institutions for normal use in business, secured by fixed
deposits and bonds. The maximum amount which would be withdrew totalled
Baht 60 millions.

The company has no long-term liability.