Union Assurance PLC recorded growth in new business during the July-September (3Q17) quarter over its preceding three months as the life insurer posted strong gains in premium incomes for the period. 

Union Assurance, one of the top three life insurers in the country, posted gross written premiums (GWPs) of Rs.2.63 billion for the quarter under review, against Rs.2.14 billion in the same period last year and recorded a 22 percent year-on-year (YoY) growth. 

Meanwhile, on a quarter-on-quarter (QoQ) basis, the company reported a modest 14 percent growth in GWPs. 

The QoQ growth in premiums is a clearer indication of the new business added on during 3Q17 compared to 2Q17. This is despite the much challenging economic circumstances, where the need for life insurance is not even among the top five of the priorities of an average middle-income earner in Sri Lanka, amid dwindling disposable incomes. 

Union Assurance has a total life fund of Rs.35 billion. Meanwhile, the company paid net claims and benefits of Rs.745 million during the quarter under review, up from Rs.437 million YoY. Profit from operations rose by 29 percent YoY to Rs.48.7 million before adjusting for the surplus from the life insurance business, which is adjusted only at the year end. 

The quarterly financial accounts of the group showed that its associate company, Fairfirst Insurance Limited (FIL), in which Union Assurance holds a 22 percent stake, has carried out its business activities successfully. 

The share of profit from Fairfirst Insurance for the quarter rose by 29 percent YoY to Rs.42.7 million. 
Subsequent to the regulatory call to split life and general insurance businesses across the industry, Union Assurance divested a 78 percent stake in its general insurance business before it amalgamated with Fairfirst Insurance Limited this February. 

Following that, Union Assurance General Limited ceased to exist as a legal entity and Fairfirst Insurance Limited was recognized as the continuing entity.Meanwhile, the investment income earned by Union Assurance from its Rs.35.4 billion financial assets portfolio grew by 19 percent YoY to Rs.912.8 million. 

In 2017, the insurance companies’ investment income was helped largely by the higher government securities yields among others. For the nine months ended in September, the company posted GWPs of Rs.7.2 billion, up 20 percent YoY.

While the investment income grew by 24 percent YoY to Rs.2.7 billion, the total revenue for the period, which also includes realised and fair value gains of its investment portfolio, rose by 26 percent YoY to Rs.9.93 billion. 

Fairfirst’s share of profits for the nine-month period was Rs.116.7 million, against Rs.85.5 million YoY.
For the nine months, the company paid Rs.1.68 billion as net benefits and claims. 

The operating profit before adjusting for the surplus from the life business rose by 44 percent YoY to Rs.149.9 million. 

As at September 30, 2017, John Keells Holdings held a 86.51 percent stake in Union Assurance while its subsidiary Whittall Boustead Limited held another 7.28 percent stake.