Ceylinco Life explores genesis of 20 years of leadership and keys to the future

Ceylinfo Life Chairman R. Renganathan (left) and Managing Director and CEO Thushara Ranasinghe 

With two decades of unbroken market leadership in Sri Lanka’s life insurance sector achieved, two key figures in Ceylinco Life’s remarkable journey, Chairman Rajkumar Renganathan and Managing Director/CEO Thushara Ranasinghe analyse the pivotal elements of this corporate success story, and what lies ahead. Excerpts:

Q: Ceylinco Life achieved 20 consecutive years of market leadership at the end of 2023. How is this leadership defined in the life insurance industry?

R. Renganathan: In life insurance, the key metric that determines market leadership is premium income. The company with the highest gross written premium income for that particular year is the largest life insurer in the market. This is an objective measurement that everyone can understand. When we talk about 20 years of market leadership, it means that Ceylinco Life has achieved the highest premium income every year since 2004. This is no mean feat by local or international standards.

However, we believe that in determining the market leader in life insurance, there are other factors that must also be considered. These are capital adequacy, profitability, Life Fund and Reinsurance arrangements. It would also be good if factors like claim settlement, gender equality in employment and good citizenship are assessed.

Capital adequacy in life insurance refers to the sufficiency of an insurer’s capital to cover its risks and obligations effectively. Life insurance companies hold capital to ensure they can pay policyholders’ claims, meet regulatory requirements, and remain solvent in adverse situations. The capital adequacy ratio compares an insurer’s available capital to its required capital, based on the risks inherent in its business. The risks include market risk, credit risk, concentration risk, liability risk, operational risk and reinsurance risk. The minimum capital adequacy required by the regulator is 120% while the regulator has the right to intervene when the capital adequacy is 160% or less. Notably, Ceylinco Life’s Risk-based Capital Adequacy Ratio improved to 344% at the end of 2023, well above the minimum requirement of 120%.The size of a life insurance company’s Life Fund combined with Capital Adequacy is an indicator of the ability of the company to meet future obligations. Ceylinco Life’s Life Fund stood at Rs 157.5 billion as at 31st December 2023, after a transfer of Rs 1.97 billion to the Shareholders Fund in respect of the year.

The profitability of a life insurance company is important because it is possible for companies to sell some products in their portfolios at breakeven levels or at a loss, to show premium growth. 

Finally, any life insurance company should have reinsurance arrangements with a rated insurer. This is the process of sharing its risk and enables transfer of knowledge.

Q: Besides being a barometer of success, what is the significance of market leadership to Ceylinco Life?

T. Ranasinghe: Success in life insurance can be equated with trust. Life insurance is a product that is far more intangible than a straightforward investment in an interest-earning bank deposit where the dynamic between the management of risk and return is clear. Life insurance is usually a long-term contract where the objective is not just the return on the investment, but the protection that the product offers in the event of the death or disablement of the policyholder. Therefore, the customer has to trust the life insurance company to manage its affairs well and stay financially strong for at least the duration of his or her policy, and to fulfill its promises. The significance of our market leadership, in that context, is that it affirms that Ceylinco Life is the most trusted life insurance company in the country, and has been the most trusted company for the past 20 years. This is not a value that can be bought for money. Trust is earned through our actions and consistency. 

Q: It is no secret that Ceylinco Life has had its share of challenges. How do you view your leadership in that context?

R. Renganathan: Every company faces challenges, but yes, Ceylinco Life has had to face challenges that were not related to its operations. These were challenges that could have derailed any company. Ceylinco Life not only weathered those challenges but retained its market leadership and the trust and confidence of customers, and has continued to grow in size and stature, winning global and local awards, breaking new ground in innovation and digitalization and focusing on sustainability, while retaining its close engagement with customers as well as larger communities via enduring good citizenship initiatives. This is how I view our leadership in the context of the challenges the company faced. We did not simply grow despite the challenges, we also grew because of them, converting every challenge into an opportunity to demonstrate our commitment to our core values.

Q: What did Ceylinco Life do differently, to attain market leadership in a relatively short time, and then to retain it for 20 years?

  T. Ranasinghe: The company commenced operations in 1988 and the first milestone was to become the market leader in private insurance companies, which we achieved in 1991. Thereafter, we set our target of attaining market leadership, by overhauling the state-run organization which had had a monopoly of the insurance business for a few decades. We achieved this in 2004, through product development, market penetration in rural areas, particularly in the north and east, and through a dedicated sales force which takes the message of life insurance to every home. Some of the activities that we have done consistently are the Pranama scholarships, Family Savari, Life Insurance Week and Retirement Planning Month all of which have been sustained for well over a decade. I think our commitment to discipline, core values and consistency is what sets Ceylinco Life apart from the competition.  We also invested in creating awareness and promoting products through several media outlets even when the economy took a downturn. The Ceylinco life brand that was built over the years now has a Top of Mind Awareness of 49%.

 

Q:How did the early years of the company contribute to developing its strength and spirit?

 R. Renganathan: From inception, Ceylinco Life focused on investment in training of sales personnel to enhance their professionalism, on investments in technology, establishment of a culture of its own, rewarding performance and achieving gender balance and gender equity in a sector that was highly male dominated. This ensured a motivated, qualified and happy work force. We also made it a principle that our success must be shared with all our stakeholders. In terms of products, we stayed true to the fundamentals of life insurance – that our primary role is to offer protection that de-risks the goals and ambitions of our policyholders – instead of looking for short term gains. We were conservative in our investment policies, prompt in the settlement of claims, generous in our dealings with policyholders and the community, and always put customer satisfaction at the forefront. We obtained the services of an international consultant to set up a unique, three-tiered sales structure to take the message of life insurance to every household. We developed a highly disciplined, well-trained and appropriately-attired sales force. We commissioned a family teledrama, ‘Doo Daruwo’ that appealed to mainstream Sri Lankan families, which helped our sales force gain access to potential customers to spread the message of life insurance. These were some of the initiatives that contributed to developing our unique approach to life insurance and to build affinity with the people of our country.

Q:Sustainability is now one of the biggest concerns for any business. What is Ceylinco Life’s approach to this?

T. Ranasinghe: Ceylinco Life has established a comprehensive ESG framework that influences everything we do, ensuring that environmental, social and governance aspects are always considered and prioritised. In terms of the Environment pillar, we have set a goal of reducing our carbon footprint by 5% every year. For 2023 alone, we have achieved a 9% reduction in the carbon footprint. 

Among our planet-related initiatives are investments in green buildings which have resulted in more than 30 eco-friendly branch buildings being constructed to date for our branches. 

These buildings are solar-powered, have facilities for rainwater harvesting and wastewater recycling as well as energy-efficient air-conditioning and lighting, and use innovative construction technologies and design. We have set up a Green Club which is very active in projects for responsible disposal of e-waste, re-use and recycling projects and beach clean-ups; we have invested in the reforestation of 10 acres of degraded rainforest in in the Rajawaka Forest Reserve area in Balangoda and its maintenance for five years; and we are making significant progress in enhancing the digital literacy of our sales force and the digitalisation of our processes  from customer on-boarding to offboarding, including the deployment of a dedicated customer app, to reduce the usage of paper.

In terms of the Social pillar, our ultimate objective is to eliminate the poverty that can occur at any home due to the loss of the breadwinner, by ensuring the continuance of the lifestyle and living standards. This is a goal that aligns with the UN sustainability goals pertaining to poverty elimination, good health and wellness and education. Our community commitments are mainly focused on Health and Education. We have donated five fully-equipped high dependency units to key state hospitals and maintain them. We have also conducted more than 400 free health camps across Sri Lanka, providing free access to doctors and diagnostic services to more than 150,000 people to date. In the Education sector, we have built and donated classrooms to 87 schools, and all of these projects are on-going.

Our focus on Governance has resulted in experienced and reputed CEOs, engineers, chartered accountants, eminent lawyers and architects being appointed as independent, non-executive directors of the company and they chair key board committees like the Audit committee, Risk Management committee, etc., and provide independent views and insights to the company.

Being a long-term insurer, we also ensure we always have more than adequate reserves to carry the company through difficult economic and other unforeseen upheavals.  

Q: Looking to the future, how does Ceylinco Life see its growth and evolution, especially in the context of retaining its leadership?

 R. Renganathan: The company has put into place a succession plan to ensure continuity. The chosen successors will be people who are professionals with proven leadership qualities and who are capable of responding to a rapidly changing environment and customer needs. 

The world we operate it has gone from VUCA – Volatility, Uncertainty, Complexity, and Ambiguity to RUPT – Rapid, Uncertain, Polarised and Tangled – and companies have to be extremely agile to keep moving forward in these mercurial times. Ceylinco Life has ensured ample bench strength with leaders that can bring new thinking, new initiatives and implement more agile systems to meet future challenges. 

 

Q:How will all this benefit the company’s policyholders?

 T. Ranasinghe: The continuing strength and stability of the company would mean that Ceylinco Life would not only be able to fulfill all its obligations to its customers and serve their best interests, but to go further in terms of innovation, convenience and impact. Customer centricity in all our approaches has been inbuilt to our operational framework from the early years. 

We are hoping to move one step ahead by creating a dedicated Customer Experience Team, which will go beyond the traditional customer service scope to explore new avenues to make our customer experiences more personal, customized with a more positive approach that will benefit both the customers and the company in the long run.

At Ceylinco Life, we believe that we are not the best because we are the biggest, but that we are the biggest because we are the best. We continuously strive to improve on the services offered to our policyholders and to all our stakeholders.