Part 3

Financial Status and Operation Result

13. Important Financial Data

Financial Status and Operation Result

  -------------------- --- --- --- --- --- --- --- --- --- ----------- --- -------- ----------- --- -------- ----------- --- --------
  Statements of                                                                                              (Unit :         
  Financial Position                                                                                         Thousand        
                                                                                                             Baht)           

                                                           2012            %        2013            %        2014            %

  Cash and cash                                            342,868         8.2%     237,828         5.6%     143,698         3.3%
  equivalents                                                                                                                

  Accrued investment                                       7,371           0.2%     10,788          0.2%     19,954          0.5%
  income                                                                                                                     

  Premium receivables                                      398,870         9.6%     386,651         9.1%     339,564         7.8%

  Reinsurance assets                                       802,437         19.3%    523,448         12.3%    443,233         10.2%

  Investment assets                                                                                                           

  Investment in                                                                                                               
  securities                                                                                                                 

                                                           -               0.0%     -               0.0%     -               0.0%

  Trading securities                                       276,172         6.5%     331,926         7.8%     189,449         4.4%

  Available-for-sale                                       875,197         21.1%    911,092         21.4%    932,479         21.5%
  investments                                                                                                                

  Held-to-maturity                                         884,655         21.3%    1,157,394       27.1%    1,329,482       30.7%
  investments                                                                                                                

  Other investments                                        4,386           0.1%     4,386           0.1%     3,721           0.1%

  Loans                                                    11,078          0.3%     11,203          0.3%     10,971          0.3%

                                                           -               0.0%     -               0.0%     -               0.0%

  Property, buildings,                                     218,997         5.3%     222,992         5.2%     241,402         5.6%
  equipments                                                                                                                 

  Intangible assets                                        10,600          0.3%     9,574           0.2%     9,181           0.2%

  Deferred tax assets                                      27,795          0.7%     63,133          1.5%     47,696          1.1%

  Other assets                                             294,148         7.1%     392,293         9.2%     619,018         14.3%

  Total assets                                             4,154,574       100.0%   4,262,708       100.0%   4,329,848       100.0%

  Income tax payable                                       6,610           0.2%     583             0.0%     4,051           0.1%

  Due to reinsurers                                        342,923         8.2%     363,771         8.5%     353,762         8.2%

  Insurance contract                                                                                                          
  liabilities                                                                                                                

  Loss reserves and                                        974,701         23.5%    989,554         23.2%    842,492         19.5%
  outstanding claim                                                                                                          

  Premium reserve                                          1,346,714       32.4%    1,416,401       33.3%    1,462,720       33.8%

  Employee benefit                                         127,039         3.1%     115,738         2.7%     135,801         3.1%
  obligations                                                                                                                

                                                                                                                              

                                                                                                                             

                                                                                                                              

                                                                                                                             

  Other liabilities                                        399,789         9.6%     455,098         10.7%    429,720         9.9%

  Equity                                                   956,798         23.0%    921,563         21.6%    1,101,302       25.4%

  Total liabilities                                        4,154,574       100.0%   4,262,708       100.0%   4,329,848       100.0%
  and equity                                                                                                                 

                                                                                                                              
  -------------------- --- --- --- --- --- --- --- --- --- ----------- --- -------- ----------- --- -------- ----------- --- --------

[TABLE]

  ----------- --- --- --- ------- --- --- --- --- --- ------------- --- --- ------------- --- --- ------------- --- ---
                                                      2012                  2013                  2014              

  Net                     (บาท)                       1.07                  0.65                  1.18               
  earnings                                                                                                          
  per share                                                                                                         

  Dividend                (บาท)                       0.43                  0.32                  1.111112           
  per share                                                                                                         

  Shares                  (หุ้น)                        151,500,000           151,500,000           151,500,000        
  ----------- --- --- --- ------- --- --- --- --- --- ------------- --- --- ------------- --- --- ------------- --- ---

  ------------- -------------- ------------- ---- --- ---- --- --- --- --- ------------- --- --- ------------- --- --- ------------- --- ---
                                                                                                                                          

                                                                           2012                  2013                  2014               

  Cash flows                                                                                                                              
  from                                                                                                                                   
  operating                                                                                                                              
  activities                                                                                                                             

                Direct premium                                             2,572,002             2,948,393             3,118,595          
                written                                                                                                                  

                Cash paid for                                              (91,896)              (30,205)              (230,198)          
                reinsurance                                                                                                              

                Loss incurred                                              (1,344,575)           (1,396,777)           (1,625,664)        
                on direct                                                                                                                
                insurance                                                                                                                

                Loss                                                       (27,848)              (39,081)              (32,847)           
                adjustment                                                                                                               
                expenses on                                                                                                              
                direct                                                                                                                   
                insurance                                                                                                                

                Commission and                                             (453,147)             (518,926)             (529,268)          
                brokerage on                                                                                                             
                direct                                                                                                                   
                insurance                                                                                                                

                Other                                                      (50,619)              (54,109)              (87,433)           
                underwriting                                                                                                             
                expenses                                                                                                                 

                Interest                                                   36,070                39,401                34,881             
                income                                                                                                                   

                Dividend                                                   65,530                65,725                55,726             
                income                                                                                                                   

                Ther                                                       4,175                 5,021                 5,575              
                investment                                                                                                               
                income                                                                                                                   

                Other income                                               6,448                 4,707                 8,509              

                Operating                                                  (326,176)             (437,062)             (614,962)          
                expenses                                                                                                                 

                Income tax                                                 (21,957)              (43,217)              (26,367)           

                               Net cash from                               368,007               543,870               76,547             
                               operating                                                                                                 
                               activities                                                                                                

  Cash flows                                                                                                                              
  from                                                                                                                                   
  investing                                                                                                                              
  activities                                                                                                                             

                Cash flows                                                                                                                
                from                                                                                                                     

                Investments in                                             1,266,867             1,758,925             1,534,106          
                securities                                                                                                               

                Loans                                                      4,904                 4,320                 4,672              

                Other                                                      -                     -                     -                  
                investments                                                                                                              

                Deposits at                                                278,660               674,483               780,000            
                financial                                                                                                                
                institutions                                                                                                             

                Equipment                                                  477                   128                   645                

                               Net cash from                               1,550,908             2,437,856             2,319,423          
                               investing                                                                                                 
                               activities                                                                                                

                Cash flows                                                                                                                
                used in                                                                                                                  

                Investment in                                              (1,331,327)           (1,984,564)           (1,379,844)        
                securities                                                                                                               

                Loans                                                      (2,185)               (4,370)               (4,440)            

                                                                           -                     -                     -                  

                Deposits at                                                (677,657)             (999,992)             (1,013,213)        
                financial                                                                                                                
                institutions                                                                                                             

                Property,                                                  (24,735)              (32,696)              (44,124)           
                buildings and                                                                                                            
                equipment                                                                                                                

                               Cash used in                                (2,035,904)           (3,021,622)           (2,441,621)        
                               investing                                                                                                 
                               activities                                                                                                

                               Net cash used                               (484,996)             (583,766)             (122,198)          
                               in investing                                                                                              
                               activities                                                                                                

  Cash flows                                                                                                                              
  from                                                                                                                                   
  financing                                                                                                                              
  activities                                                                                                                             

                                                                           -                     -                     -                  

                Dividend paid                                              (22,725)              (65,144)              (48,479)           

                               Net cash used                               (22,725)              (65,144)              (48,479)           
                               in financing                                                                                              
                               activities                                                                                                

  Net decrease                                                             (139,714)             (105,040)             (94,130)           
  in cash and                                                                                                                            
  cash                                                                                                                                   
  equivalents                                                                                                                            

  Cash and cash                                                            482,582               342,868               237,828            
  equivalents                                                                                                                            
  at beginning                                                                                                                           
  of year                                                                                                                                

  Cash and cash                                                            342,868               237,828               143,698            
  equivalents                                                                                                                            
  at end of                                                                                                                              
  year                                                                                                                                   

                                                                                                                                         

  Disclosure of                                                            2012                  2013                  2014               
  additional                                                                                                                             
  cash flow                                                                                                                              

                Non-cash items                                                                                                            

                …              Gain (loss)                                 52,822                (68,955)              49,251             
                               on changes in                                                                                             
                               values of                                                                                                 
                               investments                                                                                               
  ------------- -------------- ------------- ---- --- ---- --- --- --- --- ------------- --- --- ------------- --- --- ------------- --- ---

  ----------- --------------- ----------------------- --- --- --- ----- ---- --- --- -------- --- --- -------- --- --- -------- --- ---
  Financial                                                                                                                         
  Ratios                                                                                                                            

                                                                                     2012             2013             2014          

                                                                                                                                     

  (1)         LIQUIDITY RATIO                                                                                                        

              1               Liquidity ratio                                        0.70             0.59             0.55          

              1               Premium receivable                                     48.79            48.88            42.86         
                              turnover ratio                                                                                        

                                                                                                                                     

  (2)         PROFITABILITY                                                                                                          
              RATIO                                                                                                                 

              2               Retention ratio                                        70.89            76.29            75.12         

              2               Loss ratio                                             55.73            56.27            56.15         

              2               Gross profit margin                                    (2.42)           1.82             1.36          
                              ratio                                                                                                 

              2               Gross profit to total                                  (2.13)           1.75             1.26          
                              revenues ratio                                                                                        

              3               Underwriting expenses                                  46.69            41.91            42.49         
                              ratio                                                                                                 

              3               Return on investment                                   10.67            3.16             6.95          
                              ratio                                                                                                 

              3               Net written premium                                    2.16             2.35             2.26          
                              ratio                                                                                                 

              3               Net profit margin ratio                                7.27             4.13             6.71          

              3               Return on shareholders                                 18.90            10.53            17.69         
                              ‘ equity ratio                                                                                        

                                                                                                                                     

  (3)         EFFICIENCY                                                                                                             
              RATIO                                                                                                                 

              3               Return on asset ratio                                  4.23             2.35             4.17          

              3               Assets turnover ratio                                  0.58             0.57             0.62          

                                                                                                                                     

  (4)         FINANCIAL RATIO                                                                                                        

              4               Debt-to-shareholders’                                  3.34             3.63             2.93          
                              equity raio                                                                                           

              4               Policy liability to                                    1.59             2.04             1.69          
                              capital fund                                                                                          

              4               Unearned premium                                       1.02             1.17             1.03          
                              reserve to                                                                                            
                              shareholders’ equity                                                                                  
                              ratio                                                                                                 

              4               Unearned premium                                       25.77            27.50            28.41         
                              reserve to asset ratio                                                                                

              5               Dividend payout ratio                                  40.06            49.04            94.06         

                                                                                                                                     

  (5)         Net earnings                                                           1.07             0.65             1.18          
              per share                                                                                                             

                                                                                                                                     

  (6)         Dividend per                                                           0.43             0.32             1.11          
              share                                                                                                                 

                                                                                                                                     

  (7)         Book value per                                                         6.32             6.08             7.27          
              share                                                                                                                 

                                                                                                                                     

                                                                                                                                     

                                                                                                                                     
  ----------- --------------- ----------------------- --- --- --- ----- ---- --- --- -------- --- --- -------- --- --- -------- --- ---

14. Analysis and Explanation of Management Department

Performance

Comparison in 2014 and 2013, the company ‘s underwriting revenue had
increased 171.22 million Baht or 7.44%

while the underwriting expenses increased 179.36 million Baht or 7.94%
resulting the underwriting profit 33.65 million Baht

which decreased 8.14 million Baht or -19.48% At the same time, the
company investment earnings increased 102.19

million Baht resulting the company ‘s net earnings after tax 178.97
million Baht that increased 20% more than in 2013.

Underwriting revenue and expense

The company had underwriting revenue 2,471.11 million Baht that
increased 7.44% as compared in 2013 due to

the growth of Thai economy ‘2014 was in low level at 0.7% The company
had to stimulate sales volume with new products

development together with sales promotion activity resulting the
underwriting expenses increase 35.30% while loss ratio

of the first car project was still in high level.

Investment earnings

Besides the underwriting earnings, the company has a main investment
earnings with investment ratio as the Office

of Insurance Commission (OIC) announcement which had the investment
amount as of year end 2014 shown in

the Financial Statements and recorded as market price 2,466.10 million
Baht that increased 50.10 million Baht from 2013.

In 2014, the company has the investment earnings and return 102.19
million Baht that increased 109.90% from 2013

due to the improvement of current securities situation more than in
2013.

  -------------------------- -------------- ---------- ------------- ----------
  Investment Type            2014                      2013          

                             Amount         Ratio(%)   Amount        Ratio(%)

                             (Million Baht)            (Million      
                                                       Baht)         

  Cash                       1,093          44.30%     860           35.60%

  Bond                       237            9.60%      297           12.30%

  Fixed Income               99             4.10%      81            3.30%

  Equity                     362            14.70%     466           19.30%

  Unit Trust                 664            26.90%     679           28.10%

  Other                      11             0.40%      33            1.40%

  Total                      2,466          100.00%    2,416         100.00%
  -------------------------- -------------- ---------- ------------- ----------

Financial Status

The company had total assets 4,329.85 million Baht that increased 1.58%
from 2013; cash and cash equivalents 143.70

million Baht or 3.32%; investment assets included bank deposits, fixed
income, equity, government bond and other investments

2,466.10 million Baht or 56.95%, reinsurance assets and premium
receivables 782.80 million Baht or 18.08%, property, buildings,

equipment and other assets 937.25 million Baht or 21.65%

For liabilities, the company had total liabilities 3,228.55 million
Baht, decreasing -3.37% from 2013. The main items of insurance contract
liabilities included loss reserves, outstanding claim and premium
reserves 2,305.21 million Baht, decreasing

-4.19% from 2013. Furthermore, the company had the reinsurance
liabilities and other liabilities 923.34 million Baht, decreasing

-1.27% from 2013.

The company had equity 1,101.30 million Baht, increasing 19.50% from
2013 due to company profit from operations 178.97

million Baht and other comprehensive income on changes in values of
available-for-sale investments 49.25 million Baht.

In 2014, the company had direct premium written 3,049 million Baht with
growth rate 5.5% which was higher than

the growth rate of total non-life insurance business 1.07% and the
company had market share of comprehensive motor insurance

in the 11^(th) number.

  -------------------- ---------- ----------- ---------- ----------- ---------- -----------
                                                                     Unit:      
                                                                     Million    
                                                                     Baht       

                       2014                   2013                   2012       

                       Business   Thaivivat   Business   Thaivivat   Business   Thaivivat

                                                                                

  1. Total direct      205,247    3,049       203,021    2,890       179,480    2,611
  premium written                                                               

  % Growth             1.1%       5.5%        13.0%      10.7%       28.0%      29.4%

  2. Fire              11,058     176         11,812     167         9,759      162

  % Growth             -6.4%      5.4%        21.0%      3.0%        23.0%      25.4%

  3. Marine            5,293      14          5,299      10          5,193      9

  % Growth             -0.1%      38.5%       2.0%       9.1%        11.0%      54.1%

  4. Motor             117,903    2,278       118,471    2,306       103,915    2,092

  % Growth             -0.4%      -1.2%       14.0%      10.2%       24.0%      34.3%

  5. Miscellaneous     70,993     581         67,491     406         60,612     347

  % Growth             5.2%       42.9%       11.0%      17.1%       37.0%      6.8%
  -------------------- ---------- ----------- ---------- ----------- ---------- -----------

Thai economy in the year 2014 has been extended 0.7%, decelerated from
the year 2013 with the growth rate of 2.9% due to the political crisis
within the country. It affects significantly against the withdrawal of
the budget of the government sector for the regular budget, investment
budget and economic stimulation budget as well as the investment of
economic infrastructure. The whole water management system and track
system have been delayed and discontinued on tourism during the first 6
months. The number of tourists is lessened over 12 percent, and when all
situations come to an end, the different sectors jointly restore the
confidence and stimulate the tourism with different measures. The
situations of tourism have been improved so much continuously,
especially during the 4^(th) quarter s the tourism season. It was found
that the tourists from several countries extend to 7 percent, especially
China, which extend to 7 percent. It results into the improvement of the
tourism sector of the year 2014. The number of foreign tourists, who
travel into Thailand in the year 2014, is 24.7 million persons, decrease
6.6 percent.

The total value of the export in the year 2014 is 227,574 US dollars,
less 0.4 percent, as the negative amount in the 2^(nd) year from the
year 2013 in the negative amount of 0.3 percent. The important cause is
the less para-rubber export value of 26.9 percent from the excessive
supply of para-rubber in the world market and the demand of the
para-rubber is not improved. China and Malaysia reduced the purchase
orders based on the decelerated economic condition. The lowest price of
para-rubber during the past 5 years was pressurized by the price of
synthetic rubber as the substitute product made of petroleum products
and lessened according to the price of the crude oil. The economic
recovery of the important trading partner is still weak and extended
lower than being estimated because Euro Zone and Japan are not relieved
from the economic recession actually. The Japanese market suffered the
domestic economic problems and decelerated expenditure f the household
sector after the increase of the value-added tax. Chinese economy had
the deceleration signal due to the economic restructuring policy and
lessened the dependence of the international trade. US market extended
based on the domestic economic extension signal. The commercial
perspective of the border and transit with CMV Group i.e. Cambodia,
Laos, Myanmar and Vietnam has the continuous growth rate of 9 percent to
accommodate the ASEAN Economic Community.

Expenditure of durable products has not been recovered due to the high
level of debts from the debts of first car, personal credit facility and
credit card. The quantity of sold car is lessened from 33.7 percent;
from 1.33 million cars in the year 2013 to 0.88 million cars in the year
2014. The car industry starts to be balanced to the normal condition
after the end of the first car project. The whole growth rate of the
motorcycle market is lessened to 15 percent or total sales of 1.7
million cars. The primary group with the monthly income of 6,000 –
15,000 Baht is the main purchasing group of motorcycle. The financial
institute still controlled strictly the hire-purchase credit facility
due to the high outcome from the household debts. Therefore, more
conditions must be provided. The purchasing power of the household
sector is lessened with the low price of agricultural products,
especially the price of rice and para-rubber. The price force has been
reduced from 15,000 baht per ton to 8,000 baht per ton due to the
expiration of the rice mortgage project of the government.

The economic stability is in the good criteria both domestically and
internationally. The unemployment rate is still low continuously. The
price of the crude oil has been reduced quickly since the 4^(th) quarter
due to the increasing supply in the world market from the technology
advance of excavation of Shane Oil, and the reaction of the major oil
export countries group, did not lessen the overbalanced productivity and
the payment is nearly balanced while the international reserve per
short-term debts is stable. The Monetary Policy Committee (MPC) reduced
the interest rate from 2.25 percent to 2 percent per year in May 2014
due to the economic deceleration and continued political problems. In
addition, the financial policies could not stimulate the economy. The
financial institute has still high liquidity. The credit facility of the
commercial bank has been decelerated at 5 percent while the private
consumption credit facility (30 percent of the whole credit facilities)
was extended only 8 percent and decelerated due to the shrinkage f the
car credit facility and deceleration of the credit facility for credit
card.

The situation of securities market

In the year 2014, the Index of Stock Exchange of Thailand (SET Index)
increases 15.32 percent from the end of the year 2013, closing at the
level f 1,47.67 points , ratio of price per net profit (Forward p/E) at
16.6 times, dividend rate of 3.05 percent, net sale of foreign investor:
35,696 million Baht, net sales less than the previous year 2013 with the
net sales 194,702 million baht. US economy is strengthened and supported
from the extension of the employment, expenditure of the consumer. The
Central US bank (FED) resolved to reduce the measures of Quantitative
easing or “QE Measures” using the liquidity to enter into the financial
system by reducing the purchasing limit of assets from 80.5 billion US
dollars to 7.5 billion US dollars per month, commencing from January
2014 before the termination of the measures in the year end. The central
banks of Europe, Japan and China gave the signal and enacted the
financial easing measures to stimulate the economy. The central bank of
Europe announced to add the coverage for the liquidity as being done.
The central bank of china eased the restriction of the second home loan,
added the liquidity to the banks in some regions and reduced the
interest rate. In addition, the factors of reduction of the crude oil
price the world market pressurized the shares price of the energy group
during the beginning of December.

Trend of the year 2015

The World Bank estimated the world economy in the year 2015 to grow 3
percent. The developing countries grow a lot in this year, partly due to
the reduction of the crude oil price. While the US economy could be
expanded firmly, Chinese economy is decelerated a little, but the growth
rate is still kept in the high level at 7.1 percent by adjusting the
economic structure from the focus on investment in the past to the focus
on the domestic consumption and service in order t lessen the pressure
of the cost, which is not low anymore, and the marketing efforts must
encourage the foreign investment. From the supply of excessive oil, the
manufacturers inside and outside OPEC have no outlook to reduce the
productivity to maintain

the price.

Thai economy in the year 2015 is at the start point of recovery. During
the first quarter, not much growth is seen.

The Fiscal Policy Office estimated that throughout the year, it expanded
3-4 percent from the political problems being calmed down. The main
factors, which encourage the economy, include the tourism, urged budget
withdrawal of the government

sector, investment of the private sector and consumption of the private
sector, obviousness of the infrastructure investment project to connect
the traveling and transportation with the neighboring countries in all
respects, road infrastructure, rail, waterway and air. The construction
shall be begun in another half year. It shall stimulate additional
investment of the private sector. In particular, the real estate
business shall do investment together with the investment on the project
of the public sector, law enactment to encourage Thailand to be the
Regional Trading Hub. The foreign companies with business in Thailand
and countries in the region have been registered to add the economic
activities relating to the international trade in Thailand. On
consumption of the private sector, people have more money because the
oil price is lessened continuously and tends to be in the low level
throughout the year. The inflation rate tends to be less. Thailand do
net import of oil and fuel 8 percent of GDP and could save the cost of
crude oil import approximately 500,000 million Baht. The current account
is

overbalanced and hardened Thai Baht currency. However, the lessened
price of crude oil in the world market affects against the price of
other consumable products i.e. para rubber, sugarcane, palm etc. The
less demand for alternative energy like biodiesel affects against the
price of sugarcane, cassava and oil palm as the raw material for ethanol
production. The export value of consumable products of Thailand being
calculated as 15 percent of the whole export value of Thailand is less
based on the price of the world market. The less price of the crude oil
affects heavily against Russia, who depends mainly on the income from
the oil export, and the Ruble Currency has been wakened over 50 percent
and affects against the tourism of Thailand. Russian tourists are
considered t be important in the 3^(rd) rank of the number of foreign
tourists, who visit Thailand. Especially at Pattaya and Phuket, tourists
from Russia are 23 and 19 percent respectively. Free trade under the
framework AEC causes the commercial trend and tourism on the border as
well as investment in the Special Economic Zone to be more.

The management of the financial policy of the main country with
different way may cause the world financial market

to be variable. The central banks of Europe and Japan shall give
additional financial easing measures with the quantitatively financial
policy (QE) because the interest rate would probably not be lessened
anymore to relieve the economic system from the recession while the US
Central Bank (FED) has the possibility to increase the interest rate
from the 4^(th) quarter to the beginning of the year 2016. It results in
the variability of the capital to the different regions as well as
results in the exchange rate. It is anticipated that the affection
against the capital transfer from QE of Europe or Japan at this time may
not be similar to QE of USA. Every country in the world manages the
financial stimulation policy and searches for the investment source to
give the yield. At this time, the investors choose more careful
investment and focus on the basic factors of the country, where they do
investment. The operation results of the companies being registered in
the Security Exchange of Thailand are expected to expand 10 percent,
recovered from the year 2014 in negative number of -3 percent.

The insurance business in the year 2015 tends to be recovered based on
the economic circumstance. It is expected for

the growth rate of 3 percent in comparison with the expansion rate of 1
percent in the year 2014. (Car insurance premium of 58 percent of the
whole insurance premium is less 1 percent while other categories of
insurance premium grow 2 percent from the expansion of the accident
insurance, health insurance, crops insurance and property risk
insurance.) The car market of the year 2015 shall become in normal
condition, and Thai economy has been recovered. The sales perspective is
at 920,000 cars,

increasing 4.3 percent. The price of agricultural products, specially
rice and para rubber, has been lowered continuously. The car market was
stagnant. The large number of second-handed cars on competition in the
market shall be the important pressure. The commercial car market tends
to grow based on the investment of the public sector in the
transportation system. In addition, the free trade under the framework
of AEC shall be another supporting force of business expansion relating
to the transportation sector. The trend for motorcycle in the year 2015
shall not grow due to the restrictions of number of population and car
owning ratio, except for the economic stimulation factors, which may
stimulate the motorcycle market during the second half of the year. The
risk insurance premium tends to be lessened from the previous year
because the insurance company lessened the insurance premium, rate per
natural risk without severe natural disasters.