"That which does not kill us, makes us stronger"
Ceylinco Life achieved total income of Rs. 19.9 Bn for the year under review, a healthy growth of 7.26% over 2014. The primary component of our income is Gross Written Premium which improved by a noteworthy 12% to Rs. 13.4 Bn.
Our Life Fund posted net growth of Rs. 8 Bn or 13% to Rs. 68 Bn at the end of 2015.
Overcoming challenge is in our genes.
To describe 2015 as a year of challenges, overcome is perhaps an understatement, but one befitting the mettle of Ceylinco Life.
We successfully overcame an attempt to take over the Company by a minority shareholder. This shareholder has acted against the interests of the Ceylinco Insurance PLC. All actions instituted in Courts by this shareholder have been unsuccessful and/or dismissed.
Truth won out, and today 6% of the shares and the proceeds of the sale of the balance that made up the block of 22.7% are in the hands of our employees, and your Company has emerged stronger and even more stable than before. Hence my recollection above, of the famous words of the German philosopher and scholar Friedrich Nietzsche: ‘That which does not kill us, makes us stronger’.
Before I proceed to review your Company’s performance in 2015, permit me to comment on the other big challenge placed before us in the year, regrettably by the same shareholder. I refer to the delay in the segregation of our Life and General insurance operations by 1 January 2015, as mandated by the Regulation of Insurance Industry Act. It is no secret that your Company was the best prepared among all insurance companies to implement this regulatory requirement ahead of the deadline, and that the process was delayed till 1 June 2015 as a result of a series of frivolous actions filed by this hostile shareholder; these actions have been dismissed. It is our belief that these actions have had no merit.
These challenges, however, did not disturb our concentration on our core business in the year reviewed in this first Annual Report as an independent life insurance Company, and we ended 2015 as the market leader in our sector for the 12th consecutive year.
Ceylinco Life achieved total income of Rs. 19.9 Bn for the year under review, a healthy growth of 7.26% over 2014. The primary component of our income is Gross Written Premium which improved by a noteworthy 12% to Rs. 13.4 Bn, maintaining the Company’s position as the biggest life insurer in the country. Our market share stood at 26% at the end of the third quarter, well ahead of the 19% share of the second largest player in the life insurance business.
Your Company sold 170,007 new policies in 2015, averaging 14,167 a month, which is satisfactory in the context of the conditions that prevailed, particularly the continuing pressure on disposable incomes in many of the target policyholder segments. Sales of retirement plans reached Rs. 1.9 Bn in the 12 months reviewed.
Investment and other income remained flat at Rs. 6.74 Bn, an unsurprising result given the interest rates in effect. However, our investment portfolio increased by a robust 17% in value terms to Rs. 67.1 Bn, while total assets grew by a noteworthy Rs. 9.17 Bn or 12.9% to Rs. 80.2 Bn.
At the end of the year under review, the Ceylinco Life investment portfolio comprised Government Securities (53%); Licensed Private Banks (18%); State Banks (2%); Real Estate (7%); Corporate Debt (19%) and Others (1%). These investments are made in conformity with the investment guidelines stipulated under the Regulation of the Insurance Industry Act No. 43 of 2000 and are subject to regular monitoring by the Insurance Board of Sri Lanka (IBSL).
Our Life Fund posted net growth of Rs. 8 Bn or 13% to Rs. 68 Bn at the end of 2015. The Company was the fastest in the local life insurance industry to have a Life Fund of Rs. 60 Bn, a feat it achieved in 2014.
Your Company recorded net profit of Rs. 2 Bn for the year which includes a transfer of Rs. 1.8 Bn from Life Fund to Shareholder.
Ceylinco Life has always maintained a solvency ratio, that is far in excess of the statutory requirement, and 2015 was no exception. Our admissible assets over total liabilities stood at Rs. 19.5 Bn at the end of the year, 8.25 times the legally mandatory Rs. 2.4 Bn. The solvency margin is one of the most important key performance indicators for a life insurance business because it represents a company’s ability to meet the obligations arising from its life insurance contracts. The prevailing insurance regulations require insurance companies to maintain a solvency margin of not less than 5% of their statutory liabilities at all times.
Overall, I am happy to report that your Company turned in a characteristically impressive performance, especially when viewed against the challenges it faced and the market dynamics that prevailed. As always, these results reaffirm that Ceylinco Life continues to enjoy the trust and confidence of policyholders and a wide cross section of prospective customers.
Benefits to policyholders totalled Rs. 5.9 Bn in 2015, a 22% improvement over the previous year. This included ‘Avurudu Cash’ bonuses to more than 14,000 policyholders. Other policyholder benefits paid out in the year included
Rs. 3.7 Bn in maturity and other survival benefits and claims.
A policyholder benefit that continues to grow in monetary value and societal impact is our annual ‘Pranama’ scholarships programme. We presented scholarships to the value of Rs. 8 Mn to another 154 bright young Sri Lankans in 2015. With this round of scholarships, our commitment to rewarding and motivating academic and extra-curricular excellence reached Rs. 100 Mn, and had benefited a total of 1,924 children and young adults.
The expansion, consolidation and ‘Greening’ of our branch network continued apace in the year, with new branches in buildings owned by the Company being built to a new environment-friendly model that the Company has adopted. We opened new branch offices in Bandarawela, Batticaloa, Kilinochchi, Ratnapura and Trincomalee in 2015, relocated our branches in Kandy and Matara and commenced construction of new buildings for our branches in Horana, Panadura and Wennappuwa.
All new buildings constructed on company-owned land are designed to maximise use of natural light and are equipped with solar power and rainwater harvesting facilities, reflecting the Company’s commitment to reducing its environment footprint.
I am proud to report that our focus on addressing some of the pressing needs of the communities we serve remained undiminished in the year reviewed, despite the challenges we faced. Ceylinco Life has always been unwavering in its commitment to good corporate citizenship and our long running projects in the areas of community health and educational infrastructure received further support. Among the community projects of note in 2015 were:
In a market where life insurance is still sold rather than bought due to several factors including the lack of understanding of the product and its value, much effort continues to go into engaging with the masses via interactive promotions for which your Company has become the benchmark not just in the insurance industry, but across the entire corporate sector of Sri Lanka.
For example, in the eighth edition of the Ceylinco Life ‘Family Savari’ promotion, which requires no introduction, another 2,260 people from 565 policyholder families visited Switzerland, Dubai and Singapore and the Leisure World theme park in the year reviewed. As has been explained in my reviews of previous years, this promotion provides an opportunity to take the message of life insurance country-wide, attract significant numbers of new policyholders and motivate existing policyholders to keep their policies active.
The ninth edition of the Family Savari programme which was launched in the latter half of 2015 and will be executed in 2016, offers as the grand prize an all-expenses-paid holiday in Germany for five policyholders and their families, the second prize, a holiday in Dubai for 10 policyholders and their families, while another 50 policyholder families will holiday in Singapore. As in past years, another 500 families will spend a full day at Leisure World.
We also conducted our regular market expansion campaigns such as the Life Insurance Week (LIW) conducted country-wide in February, the Retirement Planning Month programme conducted in May and the ‘Ran Daru Charika’ tour of Colombo for children in April. Shareholders will agree that there is never a dull moment at Ceylinco Life!
Your Company launched an attractive new policy branded ‘Ceylinco Life Supreme’ in 2015 to spark fresh interest in life insurance. The new policy pays a percentage of the basic sum assured as lump sums every four years without any diminution of the policyholder’s maturity entitlements. It offers comprehensive life cover, above average maturity value and optional rider covers for critical illness, hospitalisation or major surgery. This product differs from other life insurance plans as it guarantees to pay the sum assured or the accumulated fund balance, whichever is higher, at maturity or in the event of premature death, with no deductions in respect of the lump sum payments already made. Ceylinco Life Supreme can be described as a life insurance policy and an investment rolled into one product that offers protection and the opportunity to make the policyholder’s aspirations a reality, through the lump sum payments.
It gives me great pleasure to report that your Company was adjudged the ‘Best Life Insurance Company in Sri Lanka’ for a second consecutive year by World Finance, the respected UK-based magazine, following an in-depth assessment of our key performance indicators. This prestigious accolade is based on scores accorded to the Company on multiple parameters pertaining to long term insurance. These include underwriting process/process efficiency; policy maintenance – the process of reviewing clients’ policies, appropriateness of coverage and cost per policy; exposure to risk; customer retention rate; time taken to settle claims; new customer acquisition rate and financial stability – premium income, life fund and market share.
Locally, the strength of the Ceylinco Life brand was emphatically reaffirmed in 2015 by the Sri Lanka Institute of Marketing (SLIM) which presented the Company with Silver Awards in two of the top three categories recognised at the annual Brand Excellence Awards. Your Company received the Silver in the Service Brand of the Year category encompassing all areas of business in the Services sector and the Silver in the Local Brand of the Year category, underlining its status as one of Sri Lanka’s pre-eminent brands. The highly competitive SLIM Brand Excellence Awards recognise brand strength in terms of financial performance, and brand health based on consumer research. An in-depth assessment of a company’s brand building processes is done as part of the judging process.
I am also pleased to inform that the Company set a new record in sales achievement in year under review, with 41 members of our sales team qualifying for membership of the Million Dollar Round Table (MDRT). This is the highest number of MDRT qualifiers produced by Ceylinco Life in a single year. Our congratulations go to all of them.
Besides these achievements, four of our sales professionals won five awards at the 2015 National Sales Congress (NASCO) Awards of the Sri Lanka Institute of Marketing (SLIM). The awards won included the Gold Award in the Sales Executive Category in the Life Insurance Sector, the Award for Most Outstanding Female Sales Person of the Year, the Silver Award in the Frontliner Category in the Life Insurance Sector, the Silver Award in the Territory Manager Category and the Bronze Award in the Sales Executive Category.
Ceylinco Healthcare Services Limited (CHSL), our wholly-owned subsidiary, made steady progress in the year concluded. The Company operates four centres of excellence, the Ceylinco Healthcare Centre specialising in screening for cancer, the Ceylinco Radiation Treatment Unit which introduced the Linear Accelerator to Sri Lanka several years ago, the Ceylinco TomoTherapy Centre, which offers one of the most advanced forms of 3-D image-guided radiation treatment in Sri Lanka and the Ceylinco Diabetes Centre. We are happy to report that the TomoTherapy Centre which commenced operation in October 2013, completed the treatment of its 200th patient in 2015. The Centre has consistently demonstrating its capability to provide comprehensive international standard radiation solutions in our own country.
The challenges we faced in 2015 have made us stronger and more determined than ever to work tirelessly to fulfil our mission. Competition will intensify, but we will take that in our stride.
The regulatory environment pertaining to our industry has changed. We welcome changes such as the risk-based capital concept and the change in the basis of valuation from the net premium basis to the gross premium basis. Conditions in the market will continue to make selling life insurance challenging, but your Company has the Products, the People, the Professionalism and the Passion to continue at the helm of the industry.
I thank my colleagues on the Board of Directors, the staff, policyholders, shareholders and regulators for their guidance and support in 2015, and look forward to their continuing goodwill in 2016.
17 February 2016