Following is an interview with HNB Assurance PLC (HNBA) CEO Deepthi Lokuarachchi, which is part of an interview series of S&P SL20 companies conducted by the Colombo Stock Exchange in partnership with Mirror Business.
What are the key milestones that HNB Assurance PLC has achieved so far in 2019?
During 2019, HNB Assurance PLC embarked on a rather challenging journey, reaching several significant milestones. The Life Fund of the company surpassed a mark of Rs.13 billion reaffirming our financial strength and stability and the Total Fund Under Management reached a value of Rs.17 billion, as at August 2019.
The company has received several awards and recognitions, such as the CA Sri Lanka Gold Award for the Integrated Annual Report of the company, Certification of Merit from CMA for the Integrated Annual Report, Great Place to Work Certification and the inclusion of HNB Assurance in the S&P SL20 index are some of the recognitions and accolades of the company.
Please outline the three most important macro trends that you believe will impact the industry you operate in?
The economic policies of the government play a significant role in the growth and sustenance of the premiums of the life and general insurance businesses. Thus, the economic policies of the government is crucial and with elections been declared, it is too early to determine and comment on how the economic factors would impact the growth and development of income levels of people and capital markets. However, the company remains confident and optimistic on the future economic outlook.
In analysing the performance of markets, the equity market has not been performing up to expectations. Capital markets have not provided the right opportunities for insurance companies to grow their funds to give the best possible returns to the policyholders and shareholders. This should be rectified for the greater benefit of the industry so that our growth too will be benefitted from the progression.
High rates of taxes have significantly increased the operating cost of the industry and we have also been affected to some extent with the increased tax burden. The anomaly prevailing in the tax regime needs immediate correction for the greater benefit of the insuring public and the company.
Could you elaborate a few growth prospects for the company going forward and how you intend to capitalise on these growth opportunities?
Amidst a very tight economic environment, the segments we operate have continued to give us adequate margins to sustain and grow the business. Our human resources (agency included) and the network partners, including our parent company and market intermediaries, have supported us with a great sense of trust and we, as company, will build on the proven success factors to grow both our lines of businesses.
In your opinion, what challenges do you anticipate in the industry that you operate in?
The implementation of IFRS 17 would pose significant challenges to the business framework and would have an impact on the business model. The increase in taxation models builds press on businesses across the industry and ultimately affects the pricing strategy of insurance products. The insurance penetration as a percentage of GDP has showcased a slight growth but remains low when compared with the countries in the region.
In addition, the thinking patterns and attitudes of people should be attuned to accept the concept of insurance as a form of protection, especially during times of uncertainty, as opposed to means of saving and investment.
Focusing on the shareholder, what efforts and initiatives are you taking to drive shareholder value?
The company’s Strategic Vision, ‘Vision 2020’, aims to benefit all stakeholders included in the business. This is reflective in the fact that within the year 2018, the share price of the company increased by 82 percent, almost doubling the value of the investments made by shareholders.
In addition, the company has maintained a dividend payout of around 40 percent benefiting the shareholders involved in the business. I am hopeful that with the first and second quarter performance of the company, the company will continue to deliver positive results and benefits to all stakeholders.
Finally, what is your message to the shareholders of HNB Assurance PLC?
I wish to thank our valued shareholders for continuing to place trust in the company and for supporting the company amidst a very challenging period. The company has been able to deliver superior returns to all stakeholders and has given them value above the industry benchmarks.