Annual Report 2009 1029/Eagle Cover:Layout 1 2/23/10 11:28 AM Page 2
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al Report 2009 nnu A A new energy. AVIVA NDB Insurance PLC–Annual Report 2009 1029/Eagle Cover:Layout 1 2/23/10 11:28 AM Page 1 1029/Eagle Cover:Layout 1 2/23/10 11:28 AM Page 2 Corporate Information Name of the Company Consultant Actuary – Life insurance AVIVA NDB Insurance PLC Mr Wong Chun Fai Company Registration No – PQ 18 Aviva Asia Pte Ltd Suntec Tower Four Legal Form 6 Temasek Boulevard, • Public Company with limited liability. #22-01, • Incorporated in Sri Lanka on 12th December 1986 under Singapore 038986 the Companies Act No. 17 of 1982. • Re - registered under the Companies Act No 07 of 2007. Consultant Actuaries – General insurance • A composite Insurance Company licensed by the Watson Wyatt Insurance Consulting (Private) Limited Insurance Board of Sri Lanka. No. 135, Cecil Street • The shares of the Company are listed on the Colombo # 09-01, Stock Exchange. Singapore 069536 Tax Payer Identification Number (TIN) Lawyers 134001356 Julius & Creasy Attorneys-at-Law & Solicitors VAT Registration Number No. 41, Janadhipathi Mawatha 134001356 7000 Colombo 01 Directors Reinsurance Panel - Life insurance Bill Lisle - Chairman Munich Re-insurance Company Shah Rouf - Managing Director* Zurich Financial Services (Isle of Man) Re-insurance Deepal Sooriyaarachchi Company Ltd Harvey Chamberlain David Hope Reinsurance Panel – General insurance Eran Wickramaratne Treaty Reinsurers Sarath Wikramanayake AVIVA Re Lal de Mel National Insurance Trust Fund Indrajit Wickramasinghe Munich Reinsurance Company Nihal Welikala (alternate director) * effective 1 March 2010 Facultative Reinsurers Zurich Insurance Company Ltd Accounting year Swiss Reinsurance Company Ltd 31 December Chartis Insurance UK Limited R+V Versicherung AG – Reinsurance Subsidiaries China International Reinsurance Co. Ltd Name of the Company Holding Principal Activity Hanoo Re (Bermuda) Ltd Rainbow Trust ACE American Insurance Company Management Limited 100% Trust Management Bankers Registered Office/ Head Office Standard Chartered Bank No. 75, Kumaran Ratnam Road, Colombo 02 Bank of Ceylon Telephone : 2310000 Commercial Bank of Ceylon PLC Fax : 2447620, 2310076 Hatton National Bank PLC E-mail : [email protected] The Hongkong & Shanghai Banking Corporation Limited Web : www.avivandb.com People’s Bank Sampath Bank PLC Company Secretary National Development Bank PLC Ms Chathuri Munaweera – LLB, Attorney–at-Law Citi Bank NA Nations Trust Bank Company Registrars National Savings Bank SSP Corporate Services (Private) Limited No. 101, Inner Flower Road, Colombo 03 Custodian Banks Telephone: 2573894, 2576871 The Hongkong & Shanghai Banking Corporation Limited Bank of Ceylon Auditors A new energy. Ernst & Young Chartered Accountants This year we feature a children’s toy – the simple paper windmill, on the cover of our Annual Report. No. 201, De Saram Place Colombo 10 It stands as an icon of the new energy and whirlwind of activity we intend to generate this year, as we embrace our new corporate persona in line with changes taking place around the Aviva world. 2010 sees us re-launch our Company with a new name and branding. This brings a fresh new outlook to our corporate strategies while we develop stronger relationships and better processes to improve services to our customers around the island. A new energy, for a new day. Table of Contents. Overview 2 Financial Highlights Our Vision. 3 Transforming into AVIVA NDB Insurance 4 Chairman’s introduction to the Annual Report of 2009 To be a world-class provider of financial 5 Managing Director’s review of operations 8 Milestones solutions for protection and wealth creation. Business Review 12 Management Discussion and Analysis 22 At AVIVA NDB, our employees matter… Our Mission. 28 Sustainability Report Governance We will be the most sought after Insurer in 36 Board of Directors 38 Senior Management Sri Lanka for security, return optimisation and 40 The Annual Report of the Board of Directors excellence in service, achieving leadership in on the affairs of the Company 47 Corporate Governance identified segments of the market. 64 Enterprise Risk Management 71 Audit and Compliance Committee Report 72 Remuneration Committee Report 73 Investment Committee Report 74 Actuary’s Report – Life Insurance Our Core Values. 75 Actuary’s Report – General Insurance 76 Statement of Solvency as at 31 December 2009 Progressiveness 77 Statement of Approved Assets as at 31 December 2009 We encourage innovation and improvement and Financial Information 80 Financial Calendar 2009 champion continuous learning. We aim to be 81 Chief Executive Officer’s and Chief Financial Officer’s the best when it comes to listening and Responsibility Statement 82 Statement of Directors’ Responsibilities responding to our customers. 83 Independent Auditors’ Report 84 Balance Sheet Performance 85 Statement of Income 86 Group Statement of Changes in Equity We set ourselves clear goals - and the only way 87 Company Statement of Changes in Equity we'll achieve them is if everyone works towards 88 Cash Flow Statement 89 Insurance Revenue Accounts them in an efficient way. 90 Industry Segment Data – Balance Sheet 2009 91 Industry Segment Data – Balance Sheet 2008 Integrity 92 Industry Segment Data – Statement of Income 2009 We aim to maintain the highest professional and 93 Industry Segment Data – Statement of Income 2008 94 Industry Segment Data – Cash Flow Statement 2009 ethical standards. We try to be open and 95 Industry Segment Data – Cash Flow Statement 2008 96 Long Term Insurance Balance Sheet – Supplemental honest, keeping commitments and taking 97 Notes to the Supplemental Long Term personal responsibility for the things we say and Insurance Balance Sheet 99 Accounting Policies do. We want to earn trust and respect through 106 Notes to the Financial Statements honesty and fairness. Other Information Teamwork 128 Quarterly Analysis 2009 129 Quarterly Analysis 2008 Teamwork is our lifeblood. We're committed to 130 Decade at a Glance 134 Share Information a common vision and objectives, depending on 136 Group Value Added Statement one another, pulling together and sharing 137 Distribution Network 138 Introduction to Insurance Accounting knowledge. We aim to create a sense of 140 Glossary community and belonging in how we operate as 147 Notice of Meeting 149 Form of Proxy a business. We take pride in our achievements. Corporate Information - Inner back cover Eagle Insurance PLC* 2 Annual Report and Accounts 2009 Overview 2 - 9 Business Review 12 - 33 Governance 36 - 77 Financial Information 80 - 127 Other Information 128 - 146 Pages 8 - 9 more on the events of 2009. Pages 22 - 25 more on our people. Pages 28 - 33 more on Social Responsibility. Financial Highlights LKR Mn 2009 2008 2007 2006 2005 Total revenue 9,655 7,265 5,875 4,813 4,277 Profit before tax 958 605 546 539 528 Gross written premium - GI 2,504 2,045 1,867 1,468 1,211 Gross written premium - Life 4,632 4,342 3,788 3,150 2,832 Net assets 2,579 2,224 2,025 1,743 1,467 Life Fund 18,048 14,484 12,306 10,508 9,238 Return on net assets (%) 37.12 27.20 26.97 30.92 35.98 Basic earnings per share (LKR) 24.35 15.46 17.57 17.45 17.18 Market capitalisation 5,340 3,450 4,523 4,065 2,550 TOTAL REVENUE PROFIT BEFORE TAX GROSS WRITTEN PREMIUM - GI LKR 9,655 Mn LKR 958 Mn LKR 2,504 Mn 958 9,655 2,504 7,265 2,045 605 1,867 546 539 5,875 528 1,468 4,813 4,277 1,211 05 06 07 08 09 05 06 07 08 09 05 06 07 08 09 GROSS WRITTEN PREMIUM - LIFE NET ASSETS LIFE FUND LKR 4,632 Mn LKR 2,579 Mn LKR 18,048 Mn 4,632 18,048 4,342 2,579 3,788 2,224 14,484 2,025 3,150 1,743 12,306 2,832 10,508 1,467 9238 05 06 07 08 09 05 06 07 08 09 05 06 07 08 09 RETURN ON NET ASSETS BASIC EARNINGS PER SHARE MARKET CAPITALISATION 37.12% LKR 24.35 LKR 5,340 Mn 24.35 37.12 35.98 5,340 30.92 4,523 17.57 17.45 17.18 4,065 27.20 26.97 15.46 3,450 2,550 05 06 07 08 09 05 06 07 08 09 05 06 07 08 09 * known as AVIVA NDB Insurance PLC with effect from 12 February 2010 Transforming into AVIVA NDB Insurance Eagle Insurance PLC has transformed into AVIVA NDB Insurance PLC, becoming a far more powerful, innovative insurer, revitalised by the combined strengths of the global Aviva group and the financial power of the NDB Group. This vital step reiterates the Aviva group’s global vision of becoming ‘One Aviva, twice the value’ to deliver a distinctive, cohesive experience that makes customers feel recognised and special. At the heart of moving to a global brand is Aviva’s commitment to create a strong unified business that brings “Prosperity and peace of mind” to customers around the globe. Aviva is the world’s fifth-largest and one of the oldest insurance groups and the biggest in the UK. The group has 54,000 employees serving 50 million customers across Europe, North America and the Asia Pacific with more than Sterling Pounds 352 billion assets under management. A leading provider of Life and pensions products, Aviva’s other business segments include fund management and General insurance. NDB Group is one of the largest financial conglomerates in Sri Lanka, operating regionally in the Maldives and Bangladesh. Today, NDB bank, the commercial banking arm of the NDB Group is the highest capitalised Sri Lankan commercial bank. The transformation reflects NDB Group’s commitment to play a pivotal role in insurance. Since Eagle was founded in 1988 the Company has passed many milestones and its newest, most forward thinking strategy is to become AVIVA NDB Insurance dedicated to offer world-class, expertise-driven, customer-centric financial solutions that meet emerging needs.