Transforming Life Insurance with a Visionary Outlook

Union Assurance Chief Executive Officer Jude Gomes

Promising a new-age life insurance experience, Union Assurance is a trailblazer in Sri Lanka’s Life Insurance industry. The company, with its visionary outlook, has transformed the industry through innovative strategies and winning execution. Today, it continues to surge ahead with strong growth momentum.     

The success of Union Assurance has been driven by its team, led by Chief Executive Officer Jude Gomes. Since taking over in late 2019, Mr. Gomes has been instrumental in transforming the company across the board, from product innovation and service excellence to its ambitious digital vision and financial growth.  

In the interview below, he talks about the company’s achievements, strategies, and future direction. 

Q.Union Assurance has achieved strong financial growth in 2022. Could you provide an overview of the performance?   

Despite operating in a challenging economic environment, Union Assurance registered remarkable performance, achieving strong financial growth across all major key indicators.  

Gross written premium increased to Rs.16.7 billion from the previous year’s figure of Rs.15.4 billion, while regular new business premiums grew from Rs.4.4 billion to Rs.4.7 billion. Profit before tax also grew significantly, rising by 42% from Rs.2.6 billion to Rs.3.7 billion. 

Furthermore, the effective reallocation of assets along with high interest rates facilitated a 42% increase in net investment income, which reached Rs.7.5 billion. Total net revenue grew from Rs.20.7 billion to Rs.23.3 billion. 

At Union Assurance, we strongly focus on fulfilling our commitment to policyholders and in 2022 we settled claims and benefits amounting to Rs.5.2 billion – an increase of 4% over the previous year. We have continued to enhance the customer experience through digitally enabled, streamlined, and efficient claims processes, ensuring the industry’s best turnaround times.   

The company also maintained a robust capital and liquidity position with a capital adequacy ratio of 194%, which is well above the minimum regulatory requirement of 120%.  

Our total assets reached Rs.76 billion while assets under management amounted to Rs.64.4 billion. Policyholders’ life fund also grew significantly, rising by 13% from Rs.48.4 billion to Rs.54.5 billion. Union Assurance’s market capitalization reached Rs.16.4 billion at the close of 2022. 

Q.How do the company’s financial achievements compare to the previous years? How significantly has the business grown?

Our performance over the past three years stands out in comparison to the industry in general and our previous growth trajectory. While the industry recorded a CAGR of 11% in regular new business premiums since 2020, Union Assurance recorded almost double the industry average at 20%. This resulted in our company becoming the second-largest regular new business producer in 2022, up from fourth place in 2019.     

Union Assurance’s growth momentum has repositioned itself as among the fastest-growing Life Insurers in Sri Lanka with the company substantially increasing its regular new business market share from 13% to 16% during this period. 

When analysing profits, PBT and PAT increased to Rs.3.7 billion and Rs.2.7 billion, respectively, indicating a 25% and 33% CAGR over the last 3 years. This resulted in the return on equity more than doubling from 8% in 2019 to 19% in 2022.  The surplus generation also doubled from Rs. 1 billion to Rs. 2.3 billion, registering a staggering CAGR of 32%. 

We have also engaged in effective and efficient asset allocation in line with the country’s economic and investment outlook. As a result, our net investment income recorded an 18% CAGR over the last 3 years to reach Rs.7.5 billion in 2022.  

The total assets of Union Assurance have also grown substantially, from just Rs.55 billion in 2019 to Rs.76 billion at the end of last year. The life fund, which is backed by A+ and above-rated reinsurers, reached Rs.54.5 billion – a 16% CAGR over the last three years.  

Q.Union Assurance operated in a challenging economic climate that posed business risks. However, the company has continued to perform impressively. What are the strategies that led to its success in 2022?    

Since the global spread of the COVID-19 pandemic in 2019, the country has experienced the worst humanitarian crisis in its 75 years of independence, facing various socioeconomic challenges, including political unrest, the collapse of the economy (with a GDP contraction of 7.8% in 2022), hyperinflation exceeding 50%, and severe shortages of food, fuel, and essential medicines. 

To overcome the crisis, we took a very proactive approach, conceptualizing and executing a multi-pronged strategy that covered all aspects of our business.   

Digitalization drive was a key focus of our strategy. Leveraging our advanced digital technology, we focused on making Life Insurance more accessible, simple, and engaging by strengthening our digital value proposition in terms of products and delivery channels. 

In addition, we drove expense optimization through operational efficiencies. We professionalized our Agency, rationalized the network, imparted superior training programs and transformed the Channel into a best-in-class. Distribution was expanded launching new business verticals. New bank partners were on-boarded, existing relationships optimized, and international best practices were imbibed with digital interventions to further strengthen our Bancassurance proposition. 

Union Assurance rebranded itself, heralding a new positioning for the organisation with the tagline ‘Your Life Our Strength’ catering to the dreams and aspirations of the changing dynamics of new-age Sri Lankans. This reimagined brand identity ushered in greater customer centricity. We consciously emphasised our brand presence in the digital space, which helps to connect with our target audience. We grew brand equity through targeted initiatives and by staying relevant to enhance brand visibility. 

Q.Could you elaborate on the company’s approach to risk management and how it has contributed to stability?

The governance framework of Union Assurance ensures that operations are carried out within the scope of the Enterprise Risk Management (ERM) framework. Our ERM framework is backed by strong ‘risk-ready’ culture that permeates throughout the many layers of the organization. Moreover, a strong control environment is embedded in our overall corporate strategy.

ERM allows us to make informed decisions within the accepted risk appetite by continuously and proactively identifying, assessing, and managing the uncertain future events and monitoring the progress of risk management to protect and create value for the company’s stakeholders. Despite the many challenges faced by the country over the year, as a responsible corporate, we take measures to improve our ERM framework and ensure being resilient in these times.

Furthermore, during the year we prioritized strengthening the steadiness of the liquidity and solvency of the company while solidifying the integration between asset allocation and KPIs of the organization.

Q.What were the steps taken to develop the distribution channels?  To what extent have they influenced the company’s performance?

As an organization, we reduced our dependency on traditional channels and strategically broad-based our distribution. New verticals were introduced and existing ones were further strengthened. We have ensured to remain connected with our target segment through an expanded footprint in high-potential metropolitan areas as well as enhancing our digital delivery platforms.

Agency distribution has been further professionalized with state-of-the-art enablers, imparting best-in-class training programs and launching niche Premier Agency propositions. 

Bancassurance remained at the forefront of strategic priorities for the company and its growth trajectory. We strengthened our industry-leading position through the acquisition of new partners and optimizing existing bank operations inculcating international best initiatives. 

These measures have solidified our distribution platform and have driven the company’s performance. They have bolstered us in terms of operational scope as well as customer accessibility.   

We launched and strengthened our elite rewards programs, ‘Union Assurance Premium Club’ and ‘Circle of Excellence’ which recognize the company’s premier insurance advisors and staff who have demonstrated outstanding salesmanship and customer service. Union Assurance also enhanced our training capabilities, setting up the virtual ‘Circle of Excellence’ to support the learning and development of our sales force with world-class programs aimed to further augment their ability to provide stellar service to our customers. These platforms enable us to showcase and reward top performers while encouraging many others to strive towards excellence. 

Q.How did Union Assurance leverage technology and digital innovation to achieve growth?

Union Assurance has been a pioneer in imbibing and driving digitization and our industry-leading technology helps us stay ahead of the curve.

Our digital App, Clicklife is revolutionary and continues to disrupt the Life Insurance industry, elevating our customer value proposition. Since its launch in 2020, we have continued to enhance the features and user-friendliness of the App to provide improved engagement and servicing ease that empowers customers to access customer service at their fingertips. 

Union Assurance’s digital journey ensures we are a paperless organization as all customer touchpoints are digitized. In addition, our virtual end-to-end selling platform – Digital Advisor Toolkit – is continually upgraded with new features to empower our distributors and Bank partners which further simplifies the purchasing process. Likewise, our virtual agency management platform FAME has enabled us to effectively manage the activity and performance of our sales force. These initiatives along with first-in-market e-MER (Electronic Medical Records), have led to significant operational efficiencies, enabling the processing of policies in just 15 minutes and industry-leading health claims settlement of over 93% within a day.  

We have consistently developed superior digital infrastructure and platforms, which have driven customer experience to new heights. It revolves around four key benefits – simplicity, easiness, affordability, and accessibility.

Q. Looking ahead, what are the company’s strategic priorities and financial targets for 2023?  What are the initiatives being taken to achieve them?

Union Assurance will continue to surge ahead, accelerating our growth momentum, and focusing on our key distribution channels. With our value-creating business model, we are confident of exceeding key stakeholders’ aspirations. We have a long-term sustainable strategy with an overarching mission – to demystify insurance, to empower the Sri Lankan dream by addressing the protection gap and safeguarding the wellbeing of all, backed by winning execution. 

The driving force of Union Assurance is its people, its innovative spirit, and our well-etched digitization roadmap, which is visionary and comprehensive. Our core strategy will continue to follow a digitized customer-centric approach, ensuring service excellence through customer empowerment, engagement, and loyalty rewards. Customized insurance propositions, increasingly drawn from global best practices and our local expertise will be developed in line with evolving market requirements. All these initiatives, driven by the best team will usher in unparalleled growth in the coming years.