HNB Assurance PLC has recorded a 15% growth in its turnover and a 20% growth in its profit after tax, according to its annual report for the year ended 31 December 2010 which was released last week.
Its Gross Written Premium (GWP) rose to Rs.2,428 million with General Insurance business growing by 19% to reach Rs. 1,344 million and Life Insurance business growing by 10% to register Rs. 1,084 million. This is the first time in the company’s nine-year history that both GWP measures crossed the Rs. 1 billion mark.
As in every single year since 2004, the company was able to record commendable growth rates in both Profit Before Tax (PBT) and Profit After Tax (PAT), the former growing by 17% to reach Rs.270 million and the latter by 20% to reach Rs. 242 million. The company was also able to deliver a Return on Equity (ROE) of 24% maintaining it above the target level of 20% for the fifth successive year.
“Taking advantage of the much improved external environment, the company was able to achieve commendable growth rates in both turnover and profit, thereby managing the challenges that were unique to the industry,” HNB Assurance Chairman Rienzie T. Wijetilleke said.
Managing Director Manjula de Silva said: “A very encouraging development witnessed in the year 2010 is the phenomenal growth achieved by the Company’s bancassurance channel which generated a GWP of Rs.158 million from life insurance recording a growth rate of 78% over the previous year.
“The number of bancassurance units operating from HNB branches with a dedicated staff member from HNB Assurance attached to it grew from 74 to 98 at end 2010. The contribution made by the Bancassurance channel grew to 15% of the total Life GWP, a very satisfactory level indeed. Apart from that, the channel contributed Rs. 551 m of General GWP as well accounting for a share of 41% of General Insurance business.”
Expressing his views on the company’s future direction, he stated: “The company is fully conscious of the weight of ever increasing expectations thrust on it and is determined to foster its image as an entity that delivers results exceeding the expectations of all its stakeholders. During the year 2011, it will aim to cross traditional boundaries in search of innovations that could provide superior customer value to enhance its position in a fiercely competitive market.”
The company also announced recently its intention to increase its stated capital from Rs.375 million to Rs. 1.17 billion. This will be done in two steps with initially Rs. 406.25 million of reserves being capitalised to create 6.25 million shares. This will be followed by a rights issue of another 6.25 million shares at a price of Rs. 62.50 bringing in a capital infusion of Rs.390.6 million.
With this move, the company will be compliant with the proposed increase in the Stated Capital of insurance companies by the IBSL to Rs. 500 million per line of business. It will also be geared to meet any capital requirements arising from the Risk Based Capital (RBC) framework which is likely to be introduced soon.
“The company will also use the proceeds of the Rights Issue to support its expansion of the branch network, upgrading of systems and enhancement of the brand image,” according to the circular issued by the HNB Assurance PLC in this regard.