3. Product and Market

3.1 Type of Insurance Business

The company mainly do the following insurance:

1.  Fire insurance

The fire insurance covers the damages of insured assets, due to fire,

thunderstruck, and those associated with the prevention of fire and so
on.

2.  Motor insurance

  The motor insurance covers damages due to the use of motor vehicles,
  including the damages of the insured motors and the assets and life of
  the third parties and passengers and so on.

  3.1.3 Marine and transportation insurance

  Marine and transportation insurance covers the losses and damages of
  hulls, cargoes and others due to marine peril and so on. Apart from
  that, it covers not only the losses and damages of airplanes, and
  cargoes in the airplanes, but also those associated with in-land
  transportation.

  3.1.4 Miscellaneous insurance

The miscellaneous insurance covers other damages, apart from what have
been mentioned.

5.  Reinsurer

  The company agrees to indemnify ceding companies as specified in the
  contracts.

The main factors effecting opportunity and threat of insurance business
is the liberalization. Insurance companies need the management with
vision and experience and ability to adjust them to the change.

3.2 Marketing and competition

The marketing policy distribution channel and target customers are as
follows:

3.2.1 Marketing strategy

  Regarding marketing strategy, the company has aimed to expand its
  non-motor business and underwrited motor insurance policies with
  suitable risks, such as compulsory motor policies. The company has
  also initiated new products to satisfy customers need.

  Apart from that, the company aims to improve the customer services
  including the issue of insurance policies and the claims services.

3.2.2 Target customers

(1) General clients

  This group includes clients who need services with speed and fair
  claims compensation.

(2) Corporate clients

  Corporate clients need quality services and like to contract with
  insurance companies with strong capital base.

(3) Existing clients

  Existing clients include those who have contacted the company for a
  long time and been loyal to the company.

  --------------------------------------------- -------------------------
  Target customers                              %

  General client                                20

  Corporate clients                             42

  Existing clients                              38

  Total                                         100
  --------------------------------------------- -------------------------

  In the last 3 years, we had no large customers of which its sales are
  more than 10% of total sales.

3.2.3 Distribution channel

The following were the distribution channels:

(1) Agents and brokers

  The company sold policies via agents and brokers with high ability and
  responsible, amounting to approximately 93% of total premium. We also
  had a plan to train new agents to be qualified ones.

(2) Direct sales

  Sales done by our direct sales team amounted to approximately 5% of
  total premium.

(3) Reinsurance

  We have also done reinsurance business, amounting to approximately 2%
  of total premium.

  3.2.4 Competition and outlook

  As at 30 September 2001, there were 77 non-life insurance companies,
  66 of which were Thai companies, 5 were branches of foreign companies,
  and the remainders operated health insurance. The company, from 1
  January 2001 to 30 September 2001, received direct premiums amounting
  to Baht 524.03 million, equivalent to 1.34% of those in the overall
  market, that amounted to Baht 39,119.59 million. It also received
  those from motor business amounting to Baht 408.06 million, equivalent
  to 1.72% of those in the market that amounted to Baht 23,770.80
  million.

  Total direct premiums in the overall market from 1 January 2001 to 30
  September 2001 grew by 8.39% over the same period in 2000, while those
  from fire, marine and transportation, motor, and miscellaneous
  expanded by –0.85%, 4.45%, 7.33% and 22.67% respectively, which were
  in line with the growth of the economy.

  Investment incomes of all insurance companies over the reported period
  amounted Baht 1,733.61 million, a 3.14% decrease over that in the
  previous year, as the deposit rates were in decline because of the
  excessive financial liquidity.

  Regarding the outlook for 2002, the world economy is expected to
  recover, and this will benefit the Thai economy. The Government’s
  spending would also stimulate the Thai economy to grow around 2.5%
  with 2.0% of inflation rate.

  Following the expansion of the Thai economy, the growth of total
  direct premiums of overall insurance market is expected to be close to
  that in the previous year. While the overall financial liquidity is
  expected to remain large, the total investment incomes could be also
  close to those in 2001.

  Regarding the outlook of the overall insurance business in the near
  future, it is likely that the competition will be intensified, while
  the Department of insurance has continuously reduced the premium rates
  of some policies. The sabotage in the United States of America last
  year has also encouraged reinsurers to carefully fix the conditions of
  the reinsurance contracts, and could request for higher rates of
  premium.

  Due to the rapid change, the insurance companies should expand
  business carefully, underwrite policies with quality, control costs,
  improve the quality of customer services, including underwriting and
  claims services, and utilize technology so as to maintain their
  competitiveness.

3.3 Policy regarding source of funds, investment, and capital
adequacy

1.  Source of funds

  The company believes that strong capital, the equity, is crucial and
  strengthens our ability to service clients, particularly in the area
  of claims. So we intend to rely on our capital as the main source of
  funds.

  Credits we obtain from external source of fund were very low (more
  detail in item 12).

  3.3.2 Investment and borrowers

The company has set up the investment committee to fix the investment
policy.

  We aim to invest in securities with strong fundamental.

  The company is unlikely to lend external customers, apart from the
  suitable cases. (more detail in item 12).

3.3.3 Capital adequacy and Liquidity

  There is detail in item 12.