AIA Insurance Lanka PLC (AIA), the local unit of Asia-based AIA Group Limited, reported earnings of Rs.71.2 million or Rs.2.32 a share for its March quarter 2017, a decline of 18 percent from a year ago as the company paid higher claims and benefits while the other expenses also rose.
The March quarter profit does not include the surplus on the life insurance business, which is done at the end of the financial year, post the actuarial valuation.
However, the Asia-based life insurer saw its gross written premiums (GWPs) rising by 11 percent to Rs.2.63 billion from
a year ago.
Sri Lanka’s life insurance penetration stands below 1.0 percent of the gross domestic product based on the GWPs and the business could face some headwinds from the current downturn in the economy as it bites into the disposable incomes of the people.
Life insurance is still not a necessity for the large majority of the Sri Lankans because of their lower disposable incomes as well as their attitude
Sri Lanka’s population is ageing fast—a phenomenon which could become a major socio-economic issue for the country in the coming 25-30 years.
AIA Insurance Lanka is the third largest life insurer in Sri Lanka based on GWPs.
The insurer’s investment incomes rose by 14.4 percent year-on-year (YoY) to Rs.1.27 billion, which could be attributed to the rising interest income because a section of the insurance assets are invested in government securities and corporate bonds.
The company paid Rs.1.42 billion in net claims and benefits, up from Rs.1.22 billion during the same
period last year.
AIA Group Limited, the third largest Asia-based insurer by market value, entered the Lankan market in December 2012 acquiring 92.7 percent of the then AVIVA NDB Insurance, in a deal valued at US $ 109 million.
In October 2015, the company divested its fully-owned general insurance subsidiary, AIA General Insurance Lanka Limited, to Janashakthi Insurance PLC for a consideration of Rs.3.2 billion to fully concentrate on the
As of March 31, 2017, the AIA group held a 97.16 percent stake in the company.