Asian Alliance Insurance records best ever performance in 2005

COMPANY RESULTS: Asian Alliance Insurance Co Ltd., (AAICL) has recorded its best ever performance during the financial year ended December 31, 2005, reinforcing the Company's status as one of insurance companies to watch!

AAICL posted a net profit attributable to ordinary shareholders of Rs. 26 million.

This substantial increase in profit was powered by healthy top line growth with Gross Written Premium (GWP) amounting to Rs. 932 million, up by 27%. The Company also managed its expenses well, another reason for improved profitability. Despite the business expansion program and the inflation rate of 11% in 2005 AAICL expenses rose by only 15%, which reflect the efficient cost management practices.

"Healthy growth in business, process improvements and efficiencies helped the Company to record an exceptional performance in 2005," AAICL Chief Executive Officer, Ramal Jasinghe said. Profit before tax at Rs. 28 million, is 32 times higher than 2004. AAICL's net assets per share increased by 36% over the previous year.

Considering the fact that management of funds is a critical aspect of an insurance company, AAICL's investments in 2005 grew by 74% to Rs. 564 million. "We over performed the targeted benchmark yields set by the Investment Committee," the CEO said.

AAICL has also maintained the solvency in its Life Insurance in excess of the minimum margin as recommended by the Consultant Actuary. Further, the Company met the required Solvency Margin of Non-Life insurance in accordance with the Solvency Margin rules applicable in year 2007.

Commenting on the overall business growth, the CEO said in 2005, Life Division once again recorded a commendable growth of 37% to achieve a Gross Written Premium of Rs. 578 million.

The Operating Surplus from Life Division was Rs. 195 million compared with Rs. 77 million in 2004, reflecting a 153% growth. "This significant improvement in Operating Surplus was possible due to the high retention rate of Life insurance policies with the average policy value of Rs. 33,000, the highest in the industry, and the reduction in expense ratio," the CEO said.

In 2004 AAICL succeeded to be ranked a competitive fifth in the market with new business of Rs. 300 million. "The operating efficiencies resulting from the high degree of professionalism maintained in the sphere of sales, maintenance of internationally accepted and sound standards of underwriting combined with prudent financial management enabled the company to transfer a Life surplus of Rs. 20 million to the shareholders after providing for a reversionary bonus to the policyholders," the CEO said.

Despite intense competition in the market, the AAICL's Non-Life Division in 2005 recorded a 14% growth in Gross Written Premium over the previous year. Highest growth in GWP of 28% was recorded in the Miscellaneous class followed with 15% growth in the Fire class.

Although the net claims increased by 11.5% in year 2005, compared to previous year the net claim ratio of 72% was a slight improvement against last year. "As a result of this and an increase in reinsurance commission the Non-Life Division managed to record a 41% growth in underwriting results, amounting to Rs. 71 million.

Non-Life business of AAICL also managed to curtail its expenses despite a major re-organization that took place during the year 2005. This resulted in a marginal increase in the net expense ratio to 39%.

AAICL, since its inception, has steadily made its mark in the Sri Lankan insurance industry.

It is backed by financially sound and leaders in their respective fields - Asia Capital Ltd., Richard Peiris & Company Ltd. and Sampath Bank.

This strong support ensures that AAICL has the right expertise and reach to propel itself to greater heights despite the highly competitive insurance industry in Sri Lanka.