HNB Assurance records 20 percent PAT growth

HNB Assurance PLC has recorded a 15 percent growth in its turnover and a 20 percent growth in its profit after tax, according to its annual report for the year ended December 31, 2010 which was released last week. Its Gross Written Premium (GWP) rose to Rs 2,428 million with General Insurance business growing by 19 percent to reach Rs 1,344 million and life insurance business growing by 10 percent to register Rs 1,084 million. This is the first time in the Company's nine year history that both GWP measures crossed the Rs one billion mark.

As in every single year since 2004, the Company was able to record commendable growth rates in both Profit Before Tax (PBT) and Profit After Tax (PAT), the former growing by 17 percent to reach Rs 270 million and the latter by 20 percent to reach Rs 242 million. The Company was also able to deliver a Return on Equity (ROE) of 24 percent maintaining it above the target level of 20 percent for the 5th successive year.

"Taking advantage of the much improved external environment, the company was able to achieve commendable growth rates in both turnover and profit, thereby managing the challenges that were unique to the industry," said HNB Assurance PLC Chairman, Rienzie T Wijetilleke.

According to its Managing Director, Manjula de Silva, 'A very encouraging development witnessed in 2010 is the phenomenal growth achieved by the company's Bancassurance channel which generated a GWP of Rs 158 million from life insurance recording a growth rate of 78 percent over the previous year. The number of bancassurance units operating from HNB branches with a dedicated staff member from HNB Assurance attached to it grew from 74 to 98 at end 2010. The contribution made by the Bancassurance channel grew to 15 percent of the total Life GWP, a very satisfactory level indeed. Apart from that, the channel contributed Rs 551 million of general GWP as well accounting for a share of 41 percent of general insurance business."

"The company is fully conscious of the weight of ever increasing expectations thrust on it and is determined to foster its image as an entity that delivers results exceeding the expectations of all its stakeholders. During 2011, it will aim to cross traditional boundaries in search of innovations that could provide superior customer value to enhance its position in a fiercely competitive market," he said.

The company intends to increase its stated capital from Rs 375 million to Rs 1.17 billion. This will be done in two steps with initially Rs 406.25 million of reserves being capitalized to create 6.25 million shares. This will be followed by a rights issue of another 6.25 million shares at a price of Rs 62.50 bringing in a capital infusion of Rs 390.6 million. With this move, the Company will be compliant with the proposed increase in the stated capital of insurance companies by the IBSL to Rs 500 million per line of business. It will also be geared to meet any capital requirements arising from the Risk Based Capital (RBC) framework which is likely to be introduced soon.