AIA insurance Lankan unit doubles December profit

AIA Insurance Lanka PLC virtually doubled its net profits for its October-December quarter to Rs.312 million from a year ago as the gross written premiums (GWPs) and the investment income rose while the benefits and claims paid slightly eased, the interim results showed. 
The company reported earnings of Rs.10.15 a share, up by 93 percent from last year. 
The gross written premiums of the company, which specialises in selling life policies, rose by 14.4 percent year-on-year (YoY) to Rs.2.7 billion while the investment incomes earned Rs.196 million more over the same quarter last year to record Rs.1.25 billion.
This may have been possible due to the rise in market interest rates, as a section of the insurance assets are required to be invested in government securities, according to the regulations. 
The company said the bancassurance business also gained momentum as few banks joined hands with AIA Lanka to offer insurance products under its channels in recent times. 
“I am delighted to report that the bancassurance channel has also delivered impressive growth”, said Pankaj Banerjee, Chief Executive Officer, in a post earnings release. 
However, the operating and administrative expenses jumped Rs.369 million to Rs.1.3 billion, respectively, probably caused by deliberate push strategies carried out while the general prices in the economy also made gains due to subsequent increase in value added tax.
On November 15, long serving Shah Rouf was succeeded by Pankaj Banerjee as the Chief Executive Officer of the Sri Lankan unit of the AIA Group, the largest Pan-Asian life insurance group, which has operation in 18 Asia Pacific markets. 
Meanwhile, for the full financial year ended December 31,2016 the Sri Lankan unit reported earnings of Rs.16.61 or Rs.510.7 million, an increase of 68.4 percent. 
This is on the back of a 20 percent growth in its GWPs, which ended the year with Rs.10.1 billion, the first time AIA Sri Lanka surpassed the milestone. 
This is the first full-year after the group sold off its general insurance business to Janashakthi, Sri Lanka’s third largest general insurer by GWP.  
During the year the group paid Rs.4.8 billion worth of net claims and benefits, almost the same as was in the last year. The May’s floods, the worst floods in decades, may have raised the claims for the year. 
Sri Lanka’s insurance industry is on a consolidation footing as too many players are fighting for a market, which is limping for years. 
The regulatory burdens also put pressure on minimum capital requirements and listing rules.  
However, Sri Lanka’s life insurance penetration hovers under 1 percent of the gross domestic product. 
Thirty insurance companies—12 life insurers, 15 non-life insurers and another 3 composite insurers—are currently operating in Sri Lanka. 
AIA Group held 97.16 percent of AIA Lanka as of December 31, 2016.