Amana Takaful sustains profit momentum into crystalline year of operation in 2014

Amana Takaful sustained its profit momentum for the third consecutive year since the company turned around in 2012, while meeting the segregation requirement in full compliance on time. 

The Composite Gross Written Premium of Amana Takaful Plc (ATPLC) grew by 10.2% over the previous year, ahead of industry growth and crossing the Rs. 2 billion threshold to close at Rs. 2.06 billion. In this performance, the Life segment grew by an encouraging 25.2% to Rs. 679.03 million, accounting for a third of the composite business share. Profit in 2014 was Rs. 63.7 million, lower by 45.5%, compared to the previous year. 

An increase in Claims and Re-Takaful commitments adversely affected profit growth.  A continuing factor for lower profits has been the unabated price discounting on Motor which has had a negative impact on the industry as a whole. Amana Takaful in this environment has met this challenge by taking prudent measures to add value to customers through increased benefits and superior service standards.

The group’s consolidated revenue of Rs. 2.38 billion, a growth of 11.2% over 2013, yielded a profit-after-tax of Rs. 109.74 million. This compares with a profit in 2013 of Rs. 157.8 million, which included a one-off gain of Rs. 27 million on the sale of three subsidiaries. The profits generated over the last three years have led to a reduction of the group’s retained losses from Rs. 414.96 million in 2011 to Rs. 116.36 million at the close of 2014. 

The Life business growth from Rs. 543 million to Rs. 679 million in 2014 was balanced with new subscriptions between the Regular Portfolio and Prosper – Amana Takaful’s wealth management product. 

The Non-Life GWP of Rs. 1.38 billion increased by 4% over the previous year, in which the motor class sustained its revenue, while non-motor business improved by 15.9%. Net claims increased to Rs. 636 million, 5.5% over 2013. 

Industry-wide, Amãna Takaful has a record of a relatively low claims ratio, attributable to astute claims management due to prudent underwriting and risk assessment. As a consequence, the risk fund is in surplus for the third successive year, enabling the company to distribute a surplus to non-claimant participants in 2015, on the basis of the fund’s performance in the reporting year.  

In keeping with the company’s pledge to spread the Takaful concept and keep it within the reach of all Sri Lankans, it has increased its branch network to 26 locations island-wide, with the latest one opening in Anuradhapura.  

The geographic footprint now includes all but one district. The branches, with state-of-the-art information communication facilities and better accessibility, serve as touch points with the wider community and continue to be the lifeblood of Amana Takaful’s business.

“Following Surplus Payments to non-claimant customers in 2012 and 2013, I am pleased to assure our customers that a further surplus payment is planned for the second quarter of 2015, on the basis of the 2014 results,” said Chairman Tyeab Akbarally. “A major milestone achieved in 2014 was the successful and timely segregation of the company’s General and Life Insurance businesses in accordance with the regulations of the Insurance Industry Amendment Act of 2011.”

“That the practice of price-undercutting for competitive advantage has militated against the health and development of the insurance business, in the context of escalating service and repair costs, which may invite regulatory mediation, if it continues unchecked,” Akbarally opined.

Amana Takaful was rated one notch higher to BBB by Lanka Rating Agency for their Claims Paying Ability. The company won two Golds, one for the Best Islamic Entity at the Sri Lanka Islamic Banking and Finance Industry Awards, while Kruthaguna – the innovative Senior Citizen Hospitalisation Scheme, clinched the ‘Product of the Year’.

The current Board of Amana Takaful Plc includes Tyeab Akbarally (Chairman), Ehsan Zaheed (Executive Director), Non-Executive Directors Osman Kassim, Dr. A.A.M. Haroon, Dr. Ifthikar Ismail and Non-Executive Independent Directors M.H.M. Rafiq, Dato’ Fadzli Yusof, A.S.M. Muzzamil and R. Gopinath.

The directors of the newly-incorporated Life company, Amana Takaful Life Ltd., are Tyeab Akbarally (Chairman), Fazal Ghaffoor (Executive Director), Non-Executive Directors Dr.Ifthikar Ismail and Non-Executive Independent Directors M.H.M. Rafiq, Dato’ Fadzli Yusof and R. Gopinath.