Sri Lanka Insurance records robust performance in 2015

By Devin Jayasundera

Echoing the commendable performance of the country’s overall insurance industry in 2015, the Sri Lanka Insurance Corporation (SLIC) achieved a robust growth of 18.65% in gross written premium (GWP) higher than the industry growth of 16.12%. The company GWP for both life insurance and general insurance grew by 29% and 12% respectively. 

“Our real strength comes from the company’s strong balance sheet which has been nurtured carefully over 54 years,” SLIC Chairman Hemaka Amarasuriya said. With 99.9% ownership of the state, the company’s Rs.167 billion asset base is one of the largest in the industry and almost 50% higher than its closest rival. 

Emphasising on the strong financial credentials of SLIC, Amarasuriya said: “This is an organisation that doesn’t borrow from the bank. It runs its business carefully nurturing profits and converting those to assets.”

The recent floods catastrophe was a fair testing ground for the local insurance companies. “Natural disasters sometimes totally destroy insurance companies,” said Amarasuriya. Out of the Rs. 1.2 billion claims that resulted from the floods, Rs. 1.1 billion was funded with the support of reinsurance companies.

Among financial highlights, SLIC saw its profit before tax (PBT) grow to Rs.4.8 billion in 2015 from Rs.4.3 billion over the previous year, while profit after tax grew to Rs. 3.4 billion from Rs. 3.2 billion. The general insurance fund increased to almost Rs.15 billion in 2015 over the Rs.13 billion in 2014 while the life insurance fund grew to Rs. 77 billion from Rs.74 billion over the same period. Its shareholders fund was also the highest at Rs.63.7 billion. The largest ever bonus at Rs. 5.4 billion, was also paid to life policyholders during 2015. 

Amarasuriya, a veteran and a pioneer in the local corporate arena was appointed as the SLIC chairman last year. In his efforts to infuse private sector best practices to the state driven institution, he told Daily FT that his intention for SLIC is to be an employee driven organisation with “lots of liberty to enhance creativity among the staff.” 

Insurance penetration in Sri Lanka is still at a lower level than many other economies in the region. It is estimated that only 12% of the local population and 29% of the total population have obtained life policies. This untapped market potential indicates a significant opportunity for insurers to expand their businesses at the grass-root level. “It’s not only about creating awareness, we also should set our products to suit the different requirements of diverse segments of the population,” SLIC managing director Keith Bernard said.

SLIC currently enjoys an AA rating by Fitch after it was downgraded to BB- at the beginning of the year as a result of the rating agency downgrading the country’s external debt which impacted the credit rating of several state-run agencies. 

 According to SLIC, it is the reigning market leader in the general insurance category and is also the leader for six consecutive years in the motor insurance category.

Pix by Upul Abayasekera