HNB 1H profit tops Rs 49.3 m

Motor duty reduction helps business:

Sanjeevi JAYASURIYA

The insurance industry has continued its growth momentum where a conducive environment has provided impetus for industry sustainability.

HNB Assurance was able to record positive growth for the first half of 2011 compared to the same period last year. The turnover grew by 31 percent to reach Rs 1.4 billion contributed by a 26 percent increase from life and a 36 percent increase from the general insurance sector.

“We recorded a very good growth in all segments and two classes from the general sector, motor and miscellenious recorded growth of 42 percent and 90 percent respectively. The company expects to reach Rs 3 billion turnover by the end of this year, HNB Assurance Managing Director Manjula de Silva told Daily News Business.

The company recorded a 11 percent profitability growth recording Rs 49.3 million from the general insurance despite of the low interest environment which impacted negatively on the investment income.

Among the factors that contributed for the positive growth were the overall improvement in the business climate and the increase in sales volumes. “We also carried out an upward revision in the premium rate which also contributed for the growth,” he said.

The reduction in motor duty last year and the leasing interest rates were positive factors. There was a significant increase in the number of motor vehicles which increased the insurance business. The special feature of company growth is that it came from across the country.

The EPS for the first half grew to Rs 1.07 per share and the total market capitalization reached Rs 3 billion.

The Fitch Rating has affirmed HNB Assurance A (lka) rating making it the second highest rated company in the industry. It displays stability and strong financial strength.

The strong growth comes from Bancassurance business generated through HNB bank network. There is a stationed HNB Assurance employee in 100 HNB bank branches to generate business. This new channel has shown fast growth in the recent past,” he said.

The company recorded a successful rights issue early this year to raise Rs 390 million which was oversubscribed reflecting the confidence demonstrated by shareholders.

HNB Assurance share capital reached Rs 1.17 billion and the number of shares to 50 million. The share capital is in excess of the proposed structure by the Insurance Board of Sri Lanka to have Rs 500 million capital in each line of business, separating general from life insurance business.

“The insurance industry is showing signs of strong growth. We see prospects for sustainable growth and is in the process of investing resources in the areas of systems, branch expansion and brand building,” de Silva said.