ECONOMYNEXT – Sri Lanka’s insurance industry grew 9.5 percent from a year earlier to 175.7 billion rupees in gross written premiums in 2018, slowing from 15.7 percent growth a year earlier, said Ceylinco Insurance, a top player with its own combined premiums growing 10.9 percent during the year.
The general insurance industry, mostly vehicle insurance, grew 7.9 percent from a year earlier to 95.6 billion rupees in premiums, publicly traded Ceylinco Insurance Plc stated in its annual report, while its own general insurance premiums grew 6.7 percent to 19.2 billion rupees.
However, industry growth has been falling since peaking at 20 percent in 2015 when the Central Bank injected large volumes of money by terminating term repo deals to generate a credit bubble which mostly ended up in vehicles.
Sri Lanka’s life insurance industry grew a faster 11.9 percent in 2018 to report 80.1 billion rupees in premiums, Ceylinco Insurance said, but the growth rate has dipped sharply from 17 percent in 2017 to a four-year low.
Ceylinco’s life premiums grew 13 percent to 17.8 billion rupees.
"During the year under review, we operated in the midst of volatile macro conditions both political and economic," Ajith Gunawardena, Chief Executive Officer at Ceylinco Insurance told shareholders in the company’s 2018 annual report.
"The uncertain political climate saw the country plunge into chaos towards the latter part of the year, which adversely impacted the country on many fronts.
"The depreciation of the Sri Lankan rupee further compounded the situation," he said.
Profits at Ceylinco Insurance Plc group fell 27.3 percent to 8.4 billion rupees, which amounted to 317.76 rupees a share.
The share last traded at 2,123.60 rupees.
Ceylinco Life’s post-tax profits grew 13 percent from a year earlier to 7.2 billion rupees in the year to end December 2018, but income tax grew four-fold to 1.36 billion rupees because of new tax rules, resulting in net profits falling 38 percent to 5.8 billion rupees.
The general insurance business reported a 27 percent growth in profits to 1.8 billion rupees.
According to Fitch Ratings, new vehicle import restrictions could slowdown general insurance growth, but awareness around risk management is growing.
"Climate change continued to create havoc in the island.Sri Lanka experienced floods during the month of May for the third year in a row.
"The increasing occurrence and impact of natural disasters could have an adverse impact on national growth in the long run, hindering economic progress," Gunawardena said. (COLOLMBO, April 04, 2019-SB)