Sri Lanka’s HNB Assurance eyes 15-pct premium growth in 2019

ECONOMYNEXT – Sri Lanka’s HNB Assurance is expecting planning write business of 15 percent in the year to March 2019 around 9.5 billion rupees, with restrictions on vehicle imports relaxed, though economic conditions were weak, officials said.

Chief Executive Deepthi Lokuarachchi said the firm expected 15-16 percent premium growth in 2019 with first quarter revenue increase outstripping industry growth.

"Market conditions are hard at the moment with disposable incomes coming down," Lokuarachchi said.

"Both our general and life businesses have grown faster than the market rate of growth in the first quarter."

"Our life Insurance company has recorded 17 percent revenue growth. General business had recorded 11 percent whereas the market rate is much lower than that."

According to Insurance Commission of Sri Lanka data gross premium growth in life was 9.64-pct in March quarter and general insurance was 2.79-pct.

Gross written premium grew 14 percent to 2.49 billion rupees in the March quarter but profits fell to 132 million rupees from 681 million rupees (earnings of 2.38 rupees per share) a year earlier, as benefits and claims spiked 45 percent to 937 million rupees.

Lokuarachchi said a higher volume  of life maturities contributed to the spike in claims and benefits.

Lokuarachchi said the HNB Assurance stayed out of a general price war in the insurance.

Some companies were writing business simply to fund expenses, without taking into account the actual risks, but HNB Assurance had avoided, he said.

Though HNB was not making large under-writing profits but was just about breaking even with a combined ratio of around 100.

Insurance involved selling a promise and people expected stability, he said.  He said a survey showed that HNB Assurance pricing was behind only one insurer.

Chairperson Rose Cooray said the HNB brand helped the firm. The firm also had a presence at some HNB branches.

Cooray said the relaxation of import credit restrictions by the government on motor vehicles would help general insurance sector in 2019.

Motor is 63 percent of the general insurance in Sri Lanka.

Sri Lanka was hit by monetary instability in 2018 as the central bank printed money to bring down rates, accommodate, maturing swaps and repay bonds, de-stabilizing a soft-peg with the US dollar analysts have said.

Car imports were restricted by the central bank, and banks bought bonds from fleeing foreign bond investors instead. Analysts have called for reform or abolition of the soft-peg which had generated instability in the country from shortly after independence from British rule.

But monetary instability has ended in 2019 and interest rates are coming down.

Lokuarachchi said insurers were also hit by higher tax rates under a new inland revenue law. (Colombo/July20/2019)