SLIC shines better

Wednesday, 22 February 2012 01:53 -     - {{hitsCtrl.values.hits}}

  • State giant’s leadership in general insurance gets stronger on high growth
  • Harry J’s Continental fastest growing in 2011
  • Top four players ranking intact amidst mixed performance
  • Overall General insurance market enjoys 20% growth as against 11% in 2010

The highly-competitive general insurance industry last year had enjoyed healthy growth, with State-owned giant Sri Lanka Insurance Corporation (SLIC) extending its leadership whilst its previous owner business tycoon Harry Jayawardena’s new venture clocked fastest growth.

As per provisional data obtained by the Daily FT, general insurance business in 2011 had grown by 20.8% to top the Rs. 45 billion mark.  The percentage growth in 2011 is almost double that of the previous year when the General insurance market improved by 11.5% to Rs. 37.4 billion from 2009, in which year the industry contracted by 3%.

Industry analysts described the 20% growth (last enjoyed only in 2007) highly encouraging as it reflected the overall expansion of the market in tandem with post-war rebound and business development efforts by the industry, especially the new players. There are 15 companies vying for prospects in the general insurance market.

SLIC, which emerged as the number one player in 2010 after having lost the crown to Ceylinco, not only cemented its leadership but saw it growing in 2011. Its share in 2011 was over 25% up from 24.8% in the previous year. SLIC’s General business grew by 25% or Rs. 2.3 billion to Rs. 11.5 billion.

When SLIC beat Ceylinco in 2010 to leadership, some viewed it as unsustainable, but the State giant, following its ownership going back to the Government, has proved critics and sceptics wrong. However, SLIC has had the benefit of Treasury directive that all Government business must give priority to State insurers, which in the process saw reinsurer National Insurance Trust Fund (NITF) also coming in to the fray. SLIC on its part has maintained that irrespective of possible captive business coming its way, on competitive terms it has remained dynamic, hence carving out a high 25% growth in general insurance.

Ceylinco Insurance had managed only a growth of over 8% or Rs. 816 million whilst its market share has shrunk to 22%. In 2006 Ceylinco was feasting a market share of 37% after having commendably beaten the State giant SLIC for some time.

Ceylinco’s loss of market share has been new entrants’ gain. The top five’s share was 75%, down from 79% in 2010. Group revenue grew 10% YoY to be recorded at Rs. 45.6 billion for FY 2011. Group capital expenditure for the FY 2011 amounted to Rs. 8.7 billion

Number three Janashakthi Insurance saw its General business grow by 17% to Rs. 11.5 billion or 11.6% share, marginally down by from 12% in 2010. Union Assurance saw its business grow by 16% to Rs. 4.2 billion though its market share too had slipped marginally to 9.4% from 9.8%.

Aviva NDB Insurance, whose strength is Life business, was the only player to suffer a contraction in General business (down by 5%) to Rs. 2.7 billion. Despite this, it retains the fifth slot (6% share down from 7.6%).

The multi-national linked entity’s rank is under threat from new entrant People’s Insurance, whose General business grew by 158% or Rs. 1.48 billion to Rs. 2.4 billion. Benefiting from the captive business of People’s Leasing, this insurer had shot up to sixth place (5.3% share) from nine in 2010, in the process dislodging Allianz to eighth position with a 3.3% share)

HNB Assurance retains its seventh place with its General business growing by27% to Rs. 1.7 billion or a share of 3.8%.

Harry Jayawardena-owned Continental Insurance emerged as the fastest growing general insurer in 2011 with a hefty 178% rise to be commanding business worth Rs. 1.2 billion and market share of 2.7%. This saw its rank jump to nine from 13 in 2010.

Jayawardena-controlled Distilleries and Aitken Spence were part of a consortium which owned SLIC before the Supreme Court ruled against its privatisation, re-vesting it with the State.

Chartis Insurance has moved two places to end 2011 at number 10 whilst its General business grew by 6%. Amana Takaful, which figured in the top 10 in 2010, had moved out to the number 11 slot with a 3% business growth.  

Asian Alliance had seen its General business grow by 45% which saw market share improve though its ranking as 14th remained unchanged. Co-operative Insurance and MBSL Insurance were placed 12 and 13, dipping one position over 2010, whilst Sanasa was at the bottom of the industry.

The General insurance market’s full year growth of 20% was in line with its first half expansion of 18%.

Industry regulator Insurance Board of Sri Lanka (IBSL) is expected to shortly release the final performance of both General and Life business.