The slowdown in vehicle imports and difficult economic conditions faced by policy holder may have impacted Janashakthi Insurance PLC’s June quarter (Q2) as the top line growth moderated while the claims increased, the interim financial accounts filed by the group showed.
Janashakthi, the third largest general insurer by premiums, saw its gross written premiums (GWP) rising by just 7.6 percent on year to Rs.3.4 billion for which the group general insurance business contributed 81 percent.
The general insurance, led by motor insurance, grew by 14 percent year-on-year (YoY) to Rs.2.8 billion.
Group’s life business reported premiums of Rs.659.3 million for the quarter from Rs.757. 1 million YoY as the life segment is currently undergoing restructuring.
In February, Janashakthi appointed Stuart Chapman as the Chief Executive Officer of its life business.
Sri Lanka’s life insurance penetration measured by the GWPs is still under 2.0 percent of gross domestic product, one of the lowest in the region, thus the untapped potential remains massive.
The group reported 25 cents a share on a profit of Rs.135.6 million for the three months, down by about 50 percent YoY. The share ended at Rs.15.30 at last week’s close, 10 cents or 0.66 percent higher. The net asset value per share was Rs.16.45, up from Rs.14.71.
The profit was affected by an impairment charge of Rs.133 million on account of the goodwill recognized when Janashakthi acquired the general insurance arm of the AIA Insurance late 2015.
Janashakthi paid a little over Rs.3.0 billion for the acquisition and was a better fit with Janashakthi as it seeks to consolidate its position in the tough general insurance industry.
Meanwhile for the six months ended in June (1H17), the group reported earnings of 65 cents a share or Rs.352.6 million compared to Rs.1.16 a share or Rs.630.1 million YoY. The GWPs were Rs.7.2 billion, up 11 percent YoY.
The total incomes were also supported by some good investment income during the period which rose by 27.1 percent on year to Rs.1.19 billion.
“Investments portfolio grew by Rs.2.0 billion during this six month period with average yields exceeding 10 percent. This was the key driving force behind the 36 percent YoY growth in total other revenue, which came in at Rs.1.474 billion,” the company said in a statement.
The group paid Rs.3.6 billion as net benefits and claims, compared to Rs.3.2 billion a year earlier which also weighed on the bottom line.
“Profitability was adversely affected by high claims in both the fire and engineering and the medical segment during the period under review,” the company statement noted.
As of 30 June 2017, the holding company Janashakthi PLC held 75.92 percent stake in the group while Schaffter family controlled Dunamis Capital PLC held a further 3.17 percent stake.