HNB Assurance 2Q net profit soars on higher premiums, investment income

HNB Assurance PLC’s (HNBA) profits received a boost during its most recent quarter from a strong growth in premiums amid challenging operating conditions, while the investment incomes also grew as the company added more money to its financial investments, the interim financial accounts showed. 

HNBA, a unit of Hatton National Bank PLC, reported a net profit of Rs.102.1 million or Rs.2.04 a share for the April – June quarter (2Q17) from just Rs.7.3 million or 15 cents a share during the corresponding period in 2016. 

HNB Assurance group, which also has a general insurance subsidiary, increased its consolidated gross written premiums (GWP) by as much as 25 percent year-on-year (YoY) to Rs.1.9 billion. 
HNB Assurance is one of the fastest growing insurers in Sri Lanka and the company had to segregate its business as life and non-life (general) from January 1, 2015 under the regulator’s call to split the composite insurance business.

As a result, the company established a fully owned subsidiary called HNB General Insurance Limited to carry out its non-life business.

The quarter under review saw the general insurance GWPs growing by 36 percent YoY to Rs.971.5 million and during the six months ended in June 30, 2017 (1H17), the premiums grew by 27 percent YoY to Rs.1.9 billion. 

Meanwhile, the life premiums for the quarter grew by 16 percent YoY to Rs.925.8 million and the 1H17 the growth was 17 percent YoY to Rs.1.9 billion. 

By the end of June 30, 2017, the company had a general insurance liability of Rs.2.5 billion, up 29 percent and a much bigger life fund of just under Rs.10 billion, up 14 percent YoY.

Meanwhile, the company grew its investment and dividend income by a strong 35 percent YoY to Rs.383.1 million during the 2Q17. 

While this is predominantly due to the Rs.1.8 billion increase in the financial investments during the 1H17, the yield of the investment portfolio would have also been higher than the previous year due to higher government securities yields. 

The group has a total financial investment portfolio of Rs.13.4 billion.  

The company paid Rs.519.4 million for the quarter as net benefits and claims, an increase just five percent YoY.

Meanwhile, for the 1H17, HNB Assurance reported a net profit of Rs.176.2 million or Rs.3.52 a share from Rs.32.7 million or 82 cents a share reported for the same period. 

The consolidated GWPs rose by 22 percent YoYto Rs.3.8 billion almost equally shared between life and non-life businesses. 

During the period, the company paid a total net benefits and claims of little over a billion rupees, up 12 YoY.

As of June 30, 2017, Hatton National Bank PLC held 59.99 percent stake in the company.