Union Assurance records encouraging performance in 2018

Union Assurance PLC (UA) recorded an encouraging 11% growth in Gross Written Premiums (GWP) in a challenging operating environment. Profit after tax in 2018 was Rs. 3.2 billion against Rs. 7.3 billion recorded in 2017. The Rs. 7.3 billion profit after tax in 2017 includes the one-off surplus transfer of Rs. 3.4 billion. For the year 2018, surplus transfer from the Life fund amounted to Rs. 1.1 billion. Rs. 882 million was generated from the shareholder investment portfolio and Rs. 150 million was accounted as UA’s share of profits from the general insurance business from Fairfirst Insurance Ltd. 

Total other revenue recorded a 1% degrowth. This is mainly due to increase in unrealised losses stemming from equities. The investment environment was impacted by various external and internal pressures in 2018. These factors caused volatility in equity and fixed income asset classes. 

Net insurance benefits and claims paid increased by 9% mainly due to increase in maturity and surrender payouts. Maturity payouts are in line with UA’S contractual obligations and surrender payments increased due to the challenging economic environment. Underwriting and net acquisition cost increased by 12% to Rs. 2.1 billion due to increase in GWP and changes in incentive structure. Other operating, administrative and selling expenses increased by 41% as we invested in strengthening the brand and distribution channels.

With the implementation of the surplus based income tax in accordance with the New Inland Revenue bill, the Company recognised a deferred tax asset amounting to Rs. 1.6 billion and notional tax credit amounting to Rs. 541 million. The deferred tax asset and notional tax credits will be utilised against future income tax liabilities.

As a result of the above life fund increased by 14% to Rs. 30.6 billion by year end and maintains a healthy capital adequacy ratio indicates the financial strength of the business.

During the year, UA strengthened distribution and operational capabilities. Several initiatives were undertaken to transform agency channel. In the bancassurance channel, we migrated our distribution agreements with Nations Trust Bank and Union Bank from an open architecture model to strategic, exclusive partnerships. These partnerships enable us to synergise the capabilities of both organisations to provide unique product and service solutions to untapped market segments.

UA invested Rs. 800 million to upgrade the core IT system which went live in August 2018. The new platform improves the efficacy of new product development, underwriting, policy administration, claims serving, billing, collection, payments and regulatory reporting.

UA continues to garner national and regional recognition for many facets of its business. As a result of strong top and bottom-line track record, UA was listed in the Forbes Asia ‘Best Under A Billion’ list in August 2018. UA became the only Sri Lankan company to be part of this prestigious list comprised of 200 public companies in the Asia Pacific region. UA also become the only Life Insurance Company in Sri Lanka to be recognised as the ‘Most Trusted Life Insurance Company in Asia’ at Asia’s Most Trusted Brand Awards 2018. 

UA was adjudged joint winners in the Finance and Insurance sector for 10th consecutive year at the sustainability awards conducted by the Association of Chartered Certified Accountants (ACCA). The company’s reporting practices were also recognised by the Institute of Chartered Accountants of Sri Lanka, with the 2017 annual report receiving a silver award in the insurance category and a gold award for corporate social responsibility reporting. In addition, for the demonstrated excellence in business practices, UA secured a Gold Award for Excellence in Corporate Governance, 2nd Runner-up in the Extra-Large Category and was placed Joint winners in the Insurance Category at the National Business Excellence Awards 2018.

The company was recognised as a ‘Great Place to Work’ for the sixth consecutive year by the Great Place to Work Institute highlighting UA a work place that is conducive to growth and personal development. 

UA has a strong brand, reputation for good governance, a professional team and performance driven culture. These aspects combined with our financial strength and customer focus, position UA to deliver sustainable value to all stakeholders in the years to come.