Janashakthi Insurance posts Rs 7.13 b income

Janashakthi Insurance PLC, Sri Lanka's third biggest insurer, posted a total income of Rs.7.27 billion while total gross written premium income rose 16.0 percent to Rs.7.13 billion for the year- ending December 31, 2011, the best ever performance of the Company. Non-life insurance business rose 18 percent to Rs.5,256 billion during the period under review.

Managing Director Prakash Schaffter

Operating amidst challenging economic and market conditions, Janashakthi posted a healthy Rs.636 million in post-tax profits, largely driven by growth in the Non Life segment.“I see this as a very positive trend amidst the challenges of an excessively competitive industry,” said Chairman W.T. Ellawala referring to Sri Lanka's competitive 22-player insurance industry.

Profitability came under pressure during the year under review, due to falling interest rates and sluggish returns from quoted equity portfolio. Capital Gains from Equities amounted to Rs 109 million, down from a high of Rs 290 million generated in the prior year, due to reduced market prices and revised year end valuations on a mark to market basis. This is due to adverse market movement during the year.

Janashakthi, being the third-largest insurer in the island, saw its investment portfolio increase by 20 percent to Rs. 8,054 billion. The exposure to government securities was at 41%. This is a reduction from a high of 59% in the prior year, due to the acquisition of higher yielding Corporate Bonds and Bank Investments.

Managing Director Prakash Schaffter said the management team focused on writing business at a profit, as opposed to focusing on top-line growth.“We have refrained from quoting rates that are uneconomical and do not add to our bottom-line. This has resulted in some degree of trade off between a lower top line and a higher bottom line, in keeping with our focused strategy of bottom-line growth,” Schaffter said.

Nevertheless, Janashakthi's flagship product, the motor segment, continued to drive up company profitability.Motor Gross Written Premium notched a 13 percent growth of Rs. 3.838 billion over Rs. 3.397 billion written in 2010. The sector benefited largely from a government policy directive to ease imports and custom duties that created a demand for reconditioned and new vehicles.

Gross Written Premiums from the non-motor gross gained 34.0 percent to Rs. 1.418 billion, as against Rs. 1.685 billion written in 2010. This is in excess of the market growth rate of 12 percent. During the year, the sales team focused on growing the profitability of the non-motor business, which showed positive results across all classes, particularly the fire and marine segments.