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Thursday July 18th, 2024

Sri Lanka’s AIA Insurance strongly capitalized amid Covid-19

ECONOMYNEXT – Sri Lanka’s AIA Insurance is strongly capitalized above the industry, official data shows, with officials saying its prudent investment approach and practices provide policyholders with stability through economic cycles and shocks like Covid-19.

In 2015, industry watchdog Insurance Regulatory Commission of Sri Lanka (IRCSL) brought in a risk-based capital regime replacing an earlier rule-based one.

The principle behind the capital adequacy rule is to ensure insurers are solvent enough to honour claims as they fall due.

Domestic insurers started to fully comply with the risk-based capital (RBC) regime in 2016 and must maintain a minimum RBC ratio of 120 percent.

Life insurers that report an RBC below 160 percent must provide a written submission to the regulator with a plan to improve capitalization.

AIA Sri Lanka reported the industry’s highest capital adequacy ratio at 655 percent according to the last published regulator data for 2018, improving from 595 percent a year earlier.

State-run Sri Lanka Insurance Corporation reported the second-highest capital adequacy ratio of 440 percent up from 432 percent in 2017.

“AIA Sri Lanka’s high capital adequacy ratio should provide comfort to stakeholders that the company is able to stand strong in the face of external shocks.  The capital adequacy ratio of over 5 times the stipulated regulatory minimum is a reflection of the capital that shareholders are maintaining within the business and of the prudent investment strategy that has been in place for many years” explains Gavin D’ Rosairo, Chief Financial Officer at AIA Sri Lanka.

“We have an investment policy that ensures significant exposures in government securities and high investment-grade debentures.  Credit quality is of utmost importance and therefore we ensure that we invest in A and above instruments as rated by Fitch Ratings.  We don’t invest in shares from our universal life fund for this same reason.”

Life insurers, especially those more exposed to the middle-to-low income segments, should see a spike in surrenders given the loss of income due to the covid-19 impact, though medical insurance claims would be lower during the lockdown, Asia Securities Research said in a June 2020 note.

“We also expect a significant slowdown in group insurance, downsizing in policy ticket size, as an increased number of corporates face business continuity concerns,” the report said.

“A recent industrywide push into group life policies saw an uptick in health insurance claims, across the board.

“But, with the COVID-19 scare reducing hospitals visits and admissions, life insurers will see a decline in claims in (the first half of 2020).”

AIA says it used digital channels for policyholders to make claims as well as premiums.

“This helped us to pivot quickly during the lockdowns and ensure continued service to our policyholders,” D’ Rosairo said.

According to Asia Securities, life insurance investment incomes will cushion the negative impact on operational cashflows. “As such, we still expect companies to return a profit, albeit affected, given the cash-rich nature of the business,” Asia Securities said.

For D’ Rosairo, the covid-19 crisis presents an opportunity for growth.

“It takes a crisis for people to realise the importance of having health and life insurance. Several insurance companies have digital channels but what will matter now is how effectively technology will be used to generate more awareness, increase accessibility, and generate growth,” D’ Rosairo said.

(COLOMBO, 27 July 2020)

 

 

 

 

 

 

 

 

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Sri Lanka airport will need tech to cope as volumes set to top pre-Covid levels: SITA

ECONOMYNEXT – Passenger traffic at Sri Lanka’s main airport in Katunayake is set to exceed pre-pandemic volumes by year-end and technology can be used to address congestion, an international aviation technology company said.

Self-service check-in, biometrics, reducing passenger touch points and off airport processing are some of the strategies now used to boost efficiency.

Passenger traffic, which includes regional transit passengers, at the Bandaranaike International Airport has topped 4 million by April and is likely reach 9.5 to 10 million passengers by year, which is more than the pre-pandemic level in 2019.

“The message is positive on Sri Lanka,” David Lavorel, Chief Executive, Société Internationale de Télécommunications Aéronautiques (SITA), a company that was founded by airlines and is currently serving carriers, airports and border agencies.

“You have growth coming. Of course, you have challenges if you do nothing. But I think your authorities are working on taking action.”

Sri Lanka airport agency, the immigration department and SriLankan Airlines have a unified approach to solving coming challenges, Lavorel said, after meeting Sri Lanka authorities.

SITA provides communications backbone that allows airlines to check-in passengers and move and track baggage across global airports.

ITA technology is also used by airline back-office and air traffic controllers to track and manage aircraft as they move around the world, using Inmarsat and Irridium satellite services as well ground stations that are contracted with the company.

Sri Lanka is building a second terminal with Japanese funding which was delayed after Sri Lanka defaulted on its debt and is now three to four years away. Meanwhile an attempt to build an interim airport is also bogged down.

Sri Lanka to build temporary terminal at BIA

The airport can use existing space more efficiently by using new technology and re-engineering passenger processing by reducing ‘touchpoints’ which is currently at seven, according to SITA officials.

SriLankan Airlines has deployed self-service kiosks using SITA technology.

Already about 20 percent of SriLankan passengers are using the self service check-in kiosks, Sumesh Patel, President, Asia Pacific said.

Biometrics is another technology that is used to process passengers fast, by border agencies as well as airlines.

Using biometrics British Airways reduced boarding an Airbus A380 from 50 minutes to 20 minutes, Patel said.

SIA has also discussed using optimal technology in the second terminal but detailed design of technological deployment is perhaps two years away.

Deployment of passenger processing, including self service depends on the needs of airlines, where some budget airlines prefer more self service and the strategy of the airport.

“Once the airport airport has decided, and we come with advice on the technological side,” Lavorel said.

SITA was already serving airports across the world, passenger profiles and help airports come up with optimal tech use.

Sri Lanka’s airport in addition will could also continue to grow 10 to 12 percent year on year, until the second terminal came in. All over the world airports faced infrastructure constraints as it was simply not possible to expand terminals to keep up with passenger traffic.

“We look at what current constrain on the infrastructure is, what is the passenger growth expected, what are the technologies that can be deployed and also the passenger profile.

“Not all airports we can do 100 percent self-service, because there are different passenger profiles.” (Colombo/July18/2024)

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Sri Lanka to conduct threat assessments for presidential candidates

ECONOMYNEXT – Sri Lanka’s President Ranil Wickremesinghe has submitted a cabinet paper proposing security measures for presidential candidates and former presidents, following the recent attack on former US President Donald Trump during a campaign rally in the USA.

“This proposal suggests the appointment of a committee to conduct threat assessments and provide necessary security for Presidential candidates as well as former Presidents,” a statement from his media division said.

The committee will include the Secretary of the Ministry of Public Security as Chair, the Chief of Defence Staff, the Inspector General of Police, the Chief of National Intelligence, and the Senior Deputy Inspector General of Police/Elections.

A Deputy Inspector General of Police will be appointed to oversee all security arrangements.

The committee and the designated officer will work closely with the Election Commission to ensure seamless coordination of security arrangements, the PMD said.

After today, July 17, Sri Lanka’s Election Committee is empowered to announce a date for the presidential polls due to be held this year.

Minister of Foreign Affairs M U M Ali Sabry has said the election will be held on October 5 or 12.

Members of the Samagi Jana Balawegaya (SJB) have said that the government should be accountable for the security of Opposition Leader Sajith Premadasa, the SJB’s presidential candidate. (Colombo/Jul17/2024)

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Sri Lanka rupee closes flat at 303.80/304.00 to US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed almost flat at 303.80/304.00 to the US dollar on Wednesday, from 303.70/304.00 to the US dollar on Tuesday, dealers said, while bond yields were down.

A bond maturing on 15.12.2026 closed at 10.60/75 percent, down from 10.82/92 percent.

A bond maturing on 15.12.2027 closed at 11.60/38 percent, down from 11.65/75 percent.

A bond maturing on 01.05.2028 closed at 11.72/78 percent, down from 11.80/90 percent.

A bond maturing on 15.09.2029 closed at 12.05/10 percent, down from 12.05/20 percent. (Colombo/Jul17/2024)

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