HNB Assurance talks investment strategy in tackling post-COVID economic challenges

As Sri Lanka gradually steps out of lockdown measures, markets are rolling out carefully devised plans like never before, with cuts and chops to cater the all new ‘normal’. 

The insurance industry in particular has become more attentive and attuned to the time, where deep seated changes are seen throughout the fabric of the company, also with other players adopting various strategies to cope the challenging outlook of the financial services sector, following the global outbreak of COVID-19. 

Navigating amidst many challenges in this regard, HNB Assurance PLC (HNBA) and its fully-owned subsidiary HNB General Insurance Ltd. (HNBGI) has set out well-assessed investment strategies as part of the overall business strategies deemed to add value to all stakeholders, also with the aim of supporting the country’s economy in the run up to its recovery.

Sharing his views on the company’s investment strategy and the way forward, HNBA Group Chief Investment and Strategy Officer Nilesh Amarasinghe stated: “Having experienced a two month long freeze in certain markets, the financial sector has become wide-eyed, as efforts are now towards converting the setbacks to build a stronger foundation for more sustainable returns in the long run. 

“As for the Group, we actively engaged in counterbalancing actions supported by the contingency planning processes that is set in place, one of which was justified by our investment in highly rated companies that led us in minimising the effect posed by this global crisis. This is further testified by the recent affirmation of the Group’s Fitch Ratings at A (lka) for ‘National Insurer Financial Strength Rating’.” 

Speaking further on the Group’s business model, Amarasinghe added: “Being a company with a fund based portfolio, managing nearly Rs. 25 billion funds, a robust fund management strategy is of utmost importance in value creation to our shareholders and policyholders, as well as in obtaining increased investment returns. 

“As of year 2019, the Group was able to maintain an average yield of 12.3%, sourced as a result of the investment in longer tenure instruments. This generated attractive returns to our shareholders and policyholders, and was followed throughout the beginning of year 2020 as well, which was key in keeping these time sensitive external changes at bay. 

“Such conscious business practices also resulted in maintaining an equity exposure that is less than 1%, despite drastic drops in interest rates. We believe that similar actions upon successful forecasting using economic indicators would support the careful allocation of our strategic assets to maximise returns effectively, which in turn would aid the market to function at its full and true potential.”