The Highest Honor The Siam Commercial Samaggi Insurance Public Company Limited (SCSMG) hereby would like to express our deep gratitude toward His Majesty the King of Thailand for granting to us by Warrant of Appointment the Royal Insignia (the seal of Garuda) that we can use in our business. This Royal Insignia (the seal of Garuda) which is granted to us by the Royal Warrant of Appointment truly certifies that we are the insurance company recognized by HM the King for its continuous operation of insurance business with stable financial background, carrying out honest practice while observing the law pertaining to public peace and order. We, the Board of Directors, the management and staff therefore feel greatly indebted for this kind award and proud of the honor of being His Majesty’s most faithful servants, which is a blessing to all of us. We shall uphold our integrity in the course of our operation and shall always pledge our loyalty and allegiance to our beloved King. Content VISION History and 60-year Success Story 5 A leading and respected insurance company Financial Overview 6 that adheres to the strictest principles of Message from the Chairman 8 good governance and therefore obtains the utmost trust The Board of Directors 12 and maximum satisfaction from its Organization Chart 16 customers, shareholders and employees. The Executive Officers 17 Risk Factors and Management 22 Outlook Non-life Insurance Industry & Competition 30 Progress and Performance in 2007; Planning for 2008 34 MISSION Corporate Governance’s Report 50 Audit Committee’s Report 74 Aim to provide excellent services. Statement of Directors’ Responsibilities To keep our existing customer base Concerning the Disclosure of Financial and encourage their loyalty. Reports 78 Aim to enhance new valued-customer base. Report of the Independent Certifies To treat our customers, business partners, Public Accounts 79 shareholders and employees fairly benefit. Financial Statements and Notes to the To develo new products to meet our Financial Statements 80 customers’ satisfaction. General Information 116 HISTORY AND 60-YEAR SUCCESS STORY Insurance business era truly began in Thailand in the wake of World War II. Established in 1947, by His Excellency Phraya Manawarajsewi, Samaggi Insurance Co., Ltd. is now an insurance company wholly owned by Thais. In 1983, The Siam Commercial Bank Public Company Limited entered into business relationship with the company by becoming the major shareholder. The Company was listed on the Stock Exchange of Thailand in 1986 and turned public company in 1994. In 2006, it assumed a new name of The Siam Commercial Samaggi Insurance Public Company Limited (SCSMG). July 28, 2007 is the time for celebrations to mark our diamond anniversary. Our fine performance confirms that we have continued to meet the needs and expectations of our customers. In 2007, our Statement of Operations reflected significant growth in premiums written with highest record. We have been granted the Royal Insignia (the seal of Garuda) by Royal Warrant of Appointment and awarded many prizes: July 2007: Second Prize for Non-life Insurance Company with Excellent Management, 2006 from the Department of Insurance, the Ministry of Commerce, now known as the Office of Insurance Commission (OIC). The event took place at Santi Mitree Building, Government House, where we received a plaque of honor from General Surayut Chulanont, Prime Minister. Such an award was offered on the basis of effective management, Second Prize Third Prize Second Prize stable financial background, excellent service and social 2004 2005 2006 responsibility. We have already received one of the first three prizes for three consecutive years. August 2007: Best Shareholder Treatment Award 2007 from Thailand Securities Depository Co. Ltd., Thai Listed Companies Association, Thai Investors Association and Thai Investor Relations Club in the Shareholders’ Day. The award was offered on Thai Shareholders Day to listed companies that protect the interests of their shareholders and encourage shareholders to perform their duties in a proper and responsible manner. We were one of the ten companies that received this great honor. August 2007: The Annual General Meeting: AGM 2007 Quality Assessment, We were rated, among 460 listed companies, as one of the nineteen “Excellent” companies scoring over 100. The event was held by Security Exchange Commission in cooperation with Thai Listed Companies and Thai Investors Association. Such achievement is a testimony to the efforts we put in to ensure continuous operation under good corporate governance. FINANCIAL OVERVIEW Total Assets Total Liabilities UNIT : MILLION BAHT UNIT : MILLION BAHT 5,000 3,000 4,491 2,475 4,000 3,610 3,296 3,034 3,111 2,000 1,687 3,000 1,474 1,298 1,098 2,000 1,000 1,000 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 Shareholders’ Equity Total Premium Written UNIT : MILLION BAHT UNIT : MILLION BAHT 2,500 4,000 2,015 3,300 2,000 1,936 1,813 1,822 1,923 3,000 2,010 1,500 2,000 1,819 1,368 1,493 1,000 1,000 500 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 Profit on Underwriting Net Profit UNIT : MILLION BAHT UNIT : MILLION BAHT 600 400 308 452 453 300 286 273 285 405 250 400 306 303 200 100 200 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 Financial Position UNIT : MILLION BAHT 2007 2006 Change Total Assets 4,491 3,610 24.4% Investment & Loans & Bank Deposit 3,204 2,563 25.0% Total Liabilities 2,475 1,687 46.7% Issued and paid-up capital 454 447 1.7% Shareholders’ Equity 2,015 1,923 4.8% Operating Performance UNIT : MILLION BAHT 2007 2006 Change Total Premium Written 3,300 2,010 64.2% Net Premium Written 2,324 1,291 80.0% Net Loss 988 536 84.3% Profit on Underwriting 453 452 0.4% Income on Investment 270 159 69.6% Operating Expense 410 302 35.8% Net Profit 285 273 4.5% Financial Ratio (%) 2007 2006 Change Return on Assets (Average) 7.0% 7.9% (0.9%) Return on Equity (Average) 14.5% 14.6% (0.1%) Return on Investment (Average) 9.4% 6.5% 2.9% Pay out Ratio * 89.0% - Per Share UNIT : BAHT 2007 2006 Change Basic Earnings per Share 3.17 3.06 3.5% Book Value per Share 22.17 21.51 2.9% Dividend per Share * 2.70 - * Awaiting approval from the shareholders meeting MESSAGE FROM THE CHAIRMAN (Mr.Sivavong Changkasiri) Chairman of the Board Dear Shareholders, The year 2007 was a particularly auspicious one for Thais because His Majesty King Bhumibol Adulyadej graciously reached his 80th Birthday Anniversary on December 5. We are all proud that His Majesty is the longest-reigning monarch in the world. On behalf of the Board of Directors, the management, and staff, we humbly extend our best wishes to His Majesty. Long live our King. We thank all our shareholders and customers for their continued trust and kind support, as well as the management and staff who this year achieved a record premium collection in our 60 years of business. The year saw a continued economic downturn caused by the ongoing unrest in our three southernmost provinces in its fourth consecutive year, and by the domestic political volatility, which improved somewhat toward the end of the year. Uncertainty is still prevalent among investors, as the newly-elected government has recently sworn in. These negative factors hurt business operations and investment decisions. Meanwhile, the world oil price broke a record in late 2007, with unpredictable prices year-round. As a result, both the cost of living and the inflation rate soared. Incidentally, the appreciation of the Baht dented our export picture and exports’ international competitiveness while the world economic recession contributed to the sluggish expansion in our exports. In sum, the overall picture of the Thai economy was a bleak one, with low 4% growth in GDP. The general economic downturn certainly hurt the insurance business, with a lower growth rate than the previous year. According to figures published by the Office of Insurance Commission - formerly known as the Department of Insurance - the domestic premiums rose by only 7.4%. Thai Reinsurance PCL projected the total annual premiums of 100.709 billion baht, or a 5.9% rise, compared with 12.6% of the previous year. Taking into account the premiums earned from all types of insurance for the first nine months, it was projected that just about every type of insurance premium would register rises, though somewhat more slowly than the year before. In particular, marine and transportation insurance declined in line with the reduction of exports. Fire insurance achieved dismal growth whereas other types of insurance enjoyed continuous, yet somewhat tempered, growth. Motor, personal accident, and personal health insurance achieve growth rates only because insurance companies became more aggressive for retail customers. Nevertheless, premium cuts among competing insurers represented a factor against the growth in premium collection. In 2008, the new government will be facing assorted daunting issues. The world oil price is expected to remain elevated throughout the year, the baht will remain strong, the world economic recession is here to stay, and the US sub-prime mortgage problems will persist. In the wake of the domestic elections, politics should now become more stable and hopefully the government policies should be made clearer to boost private-sector investments. The implementation of, and public-sector spending on, mega-projects may well attract such investment, leading to greater consumption. It is therefore projected that the economy of 2008 should prove much brighter, with continuous growth achievable and - most important - a healthier growth figure than in 2007.