Despite the challenging market conditions with pressures rising on disposable incomes and the need of an insurance policy becomes less of a priority, life insurer, Union Assurance PLC (UAL), increased both its gross written premiums (GWPs) and profits during its recent quarter ended September.
UAL posted a net profit of Rs.70.8 million recording an increase of 39 percent on year but the profits did not include a surplus from the life business, which is actuarially valued
The earnings per share jumped to Rs.1.20 from 59 cents a year ago as the company repurchased shares during the period.
Meanwhile, for the nine months ended September 30, the company made an earning of Rs.3.22 a share or Rs.189.8 million, which is a decrease of 87 percent from a year ago as the corresponding last year’s profit included a one-off gain of Rs.1.22 billion from the sale of its general insurance subsidiary.
Upon regulatory-driven segregation of the business into life and non-life, Union Assurance sold 78 percent of its general insurance subsidiary for a consideration of Rs.3.66 billion to Fairfax Asia Limited, which resulted in a capital gain of Rs.1.22 billion.
However, even after “excluding this transaction, the profit for the period was lower than the previous period due to a decrease in interest income as a result of reduction in funds available due to the share repurchase effected in September 2015,” the company said in a statement.
Union Assurance General Limited, now a 22 percent-owned associate company, during the nine-month period contributed with a Rs.85.5 million profit.
Sri Lanka’s overcrowded insurance industry is now seeing some form of consolidation, mostly to concentrate on profitable long-term insurance business than general insurance.
As of March 31, 2016, there were 28 insurers – 12 long-term (life) insurers, 13 general insurers and another three, which engage in both forms of the business.
Meanwhile, UAL’s GWP rose by 20 percent to Rs.6.0 billion on year. The net investment income grew by 9.0 percent to Rs.2.2 billion.
By the end of September 30, the life fund stood at Rs.30.3 billion. The company paid claims and benefits of Rs.1.1 billion, up by only 3 percent.
As of September 30, John Keells Holdings PLC held a 86.51 percent stake in the company.