One-off surplus transfer boosts HNB Assurance 1Q profit

The HNB Assurance Group has reported a Profit After Tax (PAT) of Rs. 699 million for Q1 2018, reflecting a steady growth of 844% in comparison to the PAT of Rs. 74 million recorded during the corresponding period of 2017.

This growth mainly resulted due to the transfer of One-off surplus of Rs. 381 million to the Shareholder Fund from the Non-Participating Policyholder Fund due to the change in liability valuation method and the surplus transfer made during Q1 2018 amounting to Rs. 210 million.

The group recorded a Gross Written Premium (GWP) of Rs. 2.19 billion, depicting a consolidated growth of 15% in comparison with the GWP of Rs. 1.9 billion recorded during the first quarter of 2017. The Parent Company, HNB Assurance Plc (HNBA), recorded a GWP of Rs. 1.06 billion when compared with the GWP of Rs. 988 million recorded during Q1 2017. The subsidiary, HNB General Insurance Ltd. (HNBGI), recorded a GWP of Rs. 1.14 billion against a GWP of Rs. 929 million recorded during the corresponding period last year, reflecting a growth of 22%. 

Together with the One-off Surplus, HNBA posted a PAT of Rs. 658 million for the period, recording a growth rate of 1,159%, while the PAT excluding the One-off Surplus and the surplus transfer during Q1 2018 marked a 28% growth. HNBGI recorded a PAT of Rs. 41 million when compared with the PAT of Rs. 22 million recorded during Q1 2017, showcasing a growth of 88%.

Chairperson Rose Cooray stated: “In a challenging period for the entire insurance industry, the company was able to deliver steady financial results for the first quarter of 2018. These results showcase the effectiveness of our customer centric strategies and the company’s day-to-day focus on operational efficiencies in capturing new market segments. These financial results reassure stability and the positive growth momentum of the group and will continue to steer its course through challenging market conditions by focusing on its strengths, core competencies and synergies. 

“It is pertinent to note that the PAT of the Life Insurance Company includes a surplus transfer of Rs. 210 million made as per the recommendation of the Consultant Actuary, subsequent to the valuation of the Life Fund as at the end of 1Q 2018. Further, the company also transferred Rs. 381 million to the Shareholders Fund, with the approval of the Insurance Regulatory Commission of Sri Lanka (IRCSL), as a One-off Surplus arising from the Non-Participating Life Insurance Fund due to the change in the valuation method of the Life Fund as per the regulations of the IRCSL. The one-off surplus will be kept as a Restricted Regulatory Reserve as per the directions of the IRCSL.

Managing Director/CEO Deepthi Lokuarachchi stated: “In spite of several macro-economic challenges, the group was able to achieve a GWP growth of 15% during the first quarter. The Individual and Corporate policies of the Life Insurance Company and categories such as Fire, Motor and Marine of the General Insurance Company depicted a promising growth. During the first quarter, Total Assets of the Group reached Rs. 19 billion and the Investments in Financial Instruments stood at Rs. 15 billion. The Life Insurance Fund and the General Insurance Fund reached values of Rs. 10.9 billion and Rs. 2.5 billion respectively.” 

Speaking on the group’s future outlook, Lokuarachchi added: “These results are a testament to the efforts, strategies and the positive direction of the Group. The group’s performance ambitions remain high as we continue to develop dynamic products and capture growing markets in both the Life and General Insurance segments whilst sustaining our core business model to benefit our stakeholders.”