WEAVING The Dreams of a Nation
Ceylinco Insurance PLC Annual Report 2011
WEAVING The Dreams of a Nation
As one of the country’s oldest and most trusted insurance companies, the principles we value at Ceylinco Insurance are woven into our nation’s pride. We are proud to be so deeply intertwined with so many Sri Lankan hopes and dreams as we continue to offer security and confidence to every citizen we serve, whoever they, wherever they come from.
As always, it is our belief in Sri Lanka that will help keep the Lion flag flying high and drive the nation’s prosperity ever forward.
Weaving the dreams of a nation. Because,
Ceylinco Insurance PLC 1 Annual Report 2011 Mission Our Mission is to provide protection and financial security of the highest quality to society, whilst adding to shareholders’ wealth and recognising, rewarding and valuing the dignity of our staff. Corporate Goals To provide an attractive return on investment to the shareholders, whilst retaining adequate funds for growth and to achieve a high degree of stability which would enable us to hold true to our mission in all business conditions. To be a leading provider of protection and financial security in Sri Lanka and selected international markets. To develop highly satisfied and motivated employees at all levels, who will contribute effectively and efficiently towards achieving the overall objectives of the Company. To contribute to the economic development of Sri Lanka and enhance the quality of life of its people.
Contents
Notice of Meeting 5 Reinsurance Arrangements 85 Corporate Information 6-7 Board of Directors 86-93 Financial Highlights 8-9 Corporate Governance 94-98 Our Journey 1987 – 2011 10-11 Report of the Board Audit Committee 99 Chairman’s Review 12-17 Report of the Remuneration Committee 100 Review of the Managing Director / Investment Committee Report - General 101 Chief Executive Officer (General Insurance) 18-23 Investment Committee Report - Life 102-103 Review of the Managing Director / Corporate Management - General 104-105 Chief Executive Officer (Life Insurance) 24-29 Corporate Management – Life 106-107 Customer Testimonials 30-31 Senior Sales Management – General 108-109 Management Discussion & Analysis 34-39 Management Staff - Life 110 Sustainability Report 42-59 Senior Sales Management - Life 111 Corporate Social Responsibility 60-61 Management Staff 112-117 Awards Won 62-63 Financial Calendar 2012 119 Enterprise Risk Management 64-71 Financial Statements 120-201 Branch Network – General 72-73 Quarterly Analysis 2011 202 Branch Network – Life 74-75 Quarterly Analysis 2010 203 The Year’s Events – General 76-79 Ten Year Summary 204-205 The Year’s Events – Life 80-83 Glossary of Financial & Insurance Terms 206-209 Tangible Values, Powerful Brands 84 Notes 210
Ceylinco Insurance PLC 2 Annual Report 2011 ‘Weaving the Dreams of our Nation’ because ‘In Sri Lanka We Believe’ - Our continous commitment to align our corporate strenght with every effort by the Government to promote economic development.
When in May 2009 after a 30 year war which sapped our national strength and stifled our economic growth, the LTTE was annihilated by our security forces, it marked the celebration of a second independence. Therefore the chosen theme for the 2010 Annual Report was ‘In Sri Lanka We Believe.’ It expressed our confidence that Sri Lanka will be on the fast track towards unprecedented economic development which would lead to prosperity reaching down to grass root levels. Following up on that theme and expressing our resolve to serve this country through our innovative products and the excellence of our service is this year’s theme ‘Weaving the Dreams of Our Nation’.
The performance of our country in 2011 has to be viewed against the background of the prevailing turbulent global macro - economic scenario. It was a year during which the world economy grew by 4.0% and the advanced economies grew by a dismal 1.6%. In contrast Sri Lanka achieved an impressive 8.3% growth. Contributing to this remarkable growth was the performance of the services sector which grew by 8.7% over the previous year . This accounted for 58% of the GDP. Furthermore inflation was pegged down to 4.9% and unemployment was only 4.3%.
Showing confidence in the potential of the tourism industry which increased earnings by 47% to reach US$ 736 million more up market hotel chains such as Shangri La, Hyatt and Sun City are expected to invest in Sri Lanka.
Infrastructure development projects covering road development, power development, port development were on schedule. Highlights were the completion of - Stage I of Southern Highway. Stage I of Hambantota Port. Stage I of Norochcholai Coal Power Plant Commissioning of Upper Kotmale Hydro Power Plant
As a truly Sri Lankan company whose roots are deeply embedded in the national ethos Ceylinco Insurance will be ‘Weaving the Dreams of our Nation’ by playing a very positive, in fact a pivotal role, in promoting economic development. Economic development requires that existing business enterprises need to expand and diversify. It means the use of Hi – Tec inputs by which much needed value addition can be achieved to make products and services more competitive in the local and more importantly in the global market. But there is always an element of risk in business expansion, diversification or innovation. Therefore by offering the safety net of risk transfer Ceylinco Insurance creates the right conditions for expansion, diversification and innovation without the need for business enterprises to set aside significant capital in liquid contingency funds. This also encourages new entrepreneurs to start new industries and businesses. At the same time any type of business , specially those with a high investment ratio must have long term sustainability. This is where the risk management instruments of Ceylinco Insurance as reflected by its premiums and policies offers indicators of risk levels. Business enterprises can then take steps to reduce
Ceylinco Insurance PLC 3 Annual Report 2011 their risk profile. For instance this can be done by taking steps to reduce exposure to possible natural disasters or to ensure hazard free work environments or the reduction or even avoidance of pollution causing technology.
The other significant contribution which Ceylinco Insurance has been making and will continue to make with greater intensity is in the area of Consumption. An analysis of the GDP will reveal that over 70% of GDP constitutes Consumption thus making it one of the main drivers of the economy. However individuals and families face the risk of an inability to sustain their Consumption patterns due to unexpected and heavy expenses or a substantial decrease in incomes due to accidents, illness, total and permanent disablement, death, losses due to fire, theft or natural disasters. But these reversals in life style can be prevented through the protection offered by the wide variety of Ceylinco Insurance products. These are life insurance, motor insurance, health insurance, accident insurance, household insurance and several other types of personal policies. This financial protection enables individuals and families to have uninterrupted consumption patterns which in turn will act positively on GDP growth.
Another role which Ceylinco Insurance plays is that it complements banks and other financial institutions by facilitating credit transactions regarding the purchase of land, vehicles, houses, plant and machinery and even businesses. These are all contributors to GDP growth. Finally there is the very high investment capacity of Ceylinco Insurance. As an institutional investor this company has played and will continue to play a vital role in economic growth by providing capital for infrastructural and other long term projects.
With its wide portfolio of insurance products capable of meeting the insurance needs of individuals and businesses ranging from sole proprietorships to conglomerates and having the most extensive island wide branch net work backed by trained and dedicated professionals, Ceylinco Insurance PLC is in the best position in the industry, to fulfill its role in Weaving the Dreams of our Nation.
(Key economic indicators have been taken from the ‘Road Map’ of the Central Bank of Sri Lanka’ released on 03.01.12)
Ceylinco Insurance PLC 4 Annual Report 2011 Notice of Meeting
Notice is hereby given that the Twenty Fifth Annual s 4O AUTHORISE THE $IRECTORS TO DETERMINE PAYMENTS General Meeting of the Shareholders of the Company for charitable purposes for the year 2012. will be held on Tuesday, 3rd. April, 2012 at 10.30 a.m. at the “Raja Bojun” Restaurant, Seylan Towers, No. 90, s 4O RE APPOINT !UDITORS AND AUTHORISE THE "OARD OF Galle Road, Colombo 3 and the business to be brought Directors to determine their remuneration. before the meeting will be : s 4O TRANSACT ANY OTHER BUSINESS OF WHICH DUE NOTICE s 4O READ THE .OTICE CONVENING THE -EETING shall be given. s #HAIRMANS !DDRESS s !DDRESS BY THE *OINT -ANAGING $IRECTORS By Order of the Board s 4O RECEIVE CONSIDER AND ADOPT THE 2EPORT OF THE Directors and the Financial Statements for the year ended 31st. December, 2011 and the Report of the Auditors thereon. (Mrs.) Thushara N. Jasenthuliyana Company Secretary/Senior Assistant General Manager s 4O DECLARE A $IVIDEND FOR THE YEAR ENDED 31st. December, 2011. 24th. February, 2012 s 4O RE ELECT -R +OLITHA )NDRAJITH $HARMAWARDENA who retires by rotation at the Annual General Note : Meeting in terms of Article 95, as a Director. Any shareholder unable to attend the Meeting may s 4O RE ELECT -R 0ORUTOTAGE -ARK "ONAVENTURE appoint another to attend and vote for him and such Fernando, who retires by rotation at the Annual proxy need not be a shareholder of the Company. A General Meeting in terms of Article 95, as a Director. Form of Proxy is attached in the Report. The completed Form of Proxy should be deposited at the Head Office s 4O RE ELECT -R .UGENT $UNCAN .UGAWELA WHO of the Company at 5th. Floor - “Ceylinco House”, 69, retires by rotation at the Annual General Meeting in Janadhipathi Mawatha, Colombo 1, before 10.30 a.m. on terms of Article 95, as a Director. 01st. April, 2012. s 4O RE ELECT -R 4ELGE .IHAL -AHINDA 0EIRIS WHO Shareholders/Proxyholders should bring with them their retires by rotation at the Annual General Meeting in National Identity Card or any form of valid identification terms of Article 95, as a Director. when attending the meeting. s 4O RE ELECT -R *UVANEL 'ODWIN 0ETER 0ERERA WHO It is proposed to post ordinary dividend warrants on retires at the Annual General Meeting as a Director, 11th. April, 2012 and in accordance with the rules of the in terms of Section 210 of the Companies Act Colombo Stock Exchange, the shares of the Company No. 07 of 2007. Special Notice having been given will be quoted ex-dividend with effect from 04th. April, pursuant to Sections 210 and 211 of the Companies 2012. Act No. 07 of 2007 of the intention to propose the following resolution as an ordinary resolution :
“Resolved that Mr. Juvanel Godwin Peter Perera who will be 75 years in December, 2012 be re-elected as a Director of the Company and it is specifically declared that the age limit specified in Section 210 of the Companies Act No. 07 of 2007 shall not apply to Mr. Juvanel Godwin Peter Perera.”
Ceylinco Insurance PLC 5 Annual Report 2011 Corporate Information
Registered Office Consulting Actuaries “Ceylinco House” Life Insurance No. 69, Janadhipathi Mawatha, Colombo 1, Sri Lanka. Towers Watson Risk Consulting Pte. Limited, No. 135, Cecil Street, Company Registration Number #09-01, Singapore 069536. PQ 24 General Insurance M/s. K. A. Pandit Legal Form Consultants & Actuaries, A Quoted Public Company with limited liability, 2nd. Floor - “Churchgate House”, incorporated in Sri Lanka in 1987. Licensed as a Veer Nariman Road, Company authorized to carry on insurance business, Fort, Mumbai - 400 001, India. under the Control of Insurance Act No. 25 of 1962 as amended by Act No. 42 of 1986 (Presently replaced by Board of Directors Regulation of Insurance Industry Act No. 43 of 2000). Mr. J.G.P. Perera Pg. Dip. M.CIM. (U.K.), F.C.I.M. (U.K.), - Chairman Main Place of Business (Non-Executive Director) Life Insurance “Ceylinco Life Tower”, Mr. A.R. Gunawardena F.C.I.C. - Managing Director / Chief Executive Officer No. 106, Havelock Road, (General Insurance) Colombo 5, Sri Lanka. (Executive Director) Telephone : 2461000 Call Centre : 2461461 (Hotline) Mr. R. Renganathan F.C.A., F.C.M.A. Fax : 2437613, 2555959 - Managing Director / Chief Executive Officer E-mail : [email protected] (Life Insurance) Website : www.ceylincolife.com (Executive Director) Mr. H.D.K.P. Alwis F.C.I.C. Main Place of Business General Insurance - Director / Deputy Chief Executive Officer “Ceylinco House”, (General Insurance) (Executive Director) No. 69, Janadhipathi Mawatha, Colombo 1, Sri Lanka. Mr. E.T.L. Ranasinghe M.B.A., Dip.M., F.C.I.M. (U.K.), Telephone : 2485757, 2485758, 2485759 Chartered Marketer Call Centre : 2393939 - Director / Deputy Chief Executive Officer Fax : 2485701 (Life Insurance) E-mail : [email protected] (Executive Director) Website : www.ceylinco-insurance.com Mr. W.C.J. Alwis B.Sc., F.I.I.I., F.C.I.I. (Lond.), F.I.o.D. (U.K.) The Stock Exchange Listing - Director (Technical) / Chief Technical Officer The Ordinary Shares (Voting and Non Voting) of the (Executive Director) Company are listed with the Colombo Stock Exchange Mr. P.D.M. Cooray LUTCF (U.S.A.), C.I.A.M., F.A.I.Q. (CII) of Sri Lanka. - Director / Head of Human Resources & Training (Life Insurance) Principal Activities (Executive Director) Underwriting all classes of General Insurance and Mr. K.I. Dharmawardena Attorney-at- Law Life Insurance. (“Independent” Non - Executive Director)
Auditors Mr. P.M.B. Fernando M.C.P.M., Dip. Elect. Eng., Dip. Comp. Ernst & Young, System Design, Dip. Bus. Mgmnt., Dip. Mkt. Mgmnt. Chartered Accountants, - Director / Chief Information Officer (General Insurance) No. 201, De Saram Place, (Executive Director) Colombo 10.
Ceylinco Insurance PLC 6 Annual Report 2011 Board of Directors (Continued)
Mr. D.H.J. Gunawardena F.C.M.A. (U.K.) (“Independent” Non - Executive Director)
Mr. P.A. Jayawardena F.C.A., F.C.M.A., F.M.A.A.T. (S.L.) - Director / Chief Financial Officer (Life Insurance) (Executive Director)
Mr. N.D. Nugawela F.C.I.C. - Director / Chief Operations Officer (General Insurance) (Executive Director)
Mr. T.N.M. Peiris B.A. (Econ.) (Hons.), F.C.A., F.C.M.A., F.C.I.C. - Director (Finance) / Head of Finance (Executive Director)
Mr. D.W.P. Upali A.C.A., M.B.A., F.C.M.A. - Director / Chief Financial Officer (General Insurance) (Executive Director)
Gen. C.S. Weerasooriya (Retd.) (“Independent” Non-Executive Director)
Mr. S.R. Abeynayake F.C.A., M.B.A. (Sri J.), F.C.M.A. - Director / Deputy Chief Financial Officer (Life Insurance) (Executive Director)
Company Secretary
Mrs. T.N. Jasenth uliyana F.C.I.S. (U.K.), F.C.P.M., F.C.C.S.
Bankers Bank of Ceylon Commercial Bank of Ceylon PLC Deutsche Bank AG (Custodian Bank) Hatton National Bank PLC Hongkong & Shanghai Banking Corporation Ltd. Nations Trust Bank PLC NDB Bank PLC People’s Bank Sampath Bank PLC Seylan Bank PLC Standard Chartered Bank
Ceylinco Insurance PLC 7 Annual Report 2011 Financial Highlights
Results for the year 2011 2010 Change Rs.’000 Rs.’000 %
Gross Written Premium 19,857,155 18,010,729 10.25 Net Claims / Net Benefits 7,422,040 7,025,225 5.65 Increase in Life Insurance Fund 6,335,332 5,418,174 16.93 Investments and Other Income 4,545,676 3,892,348 16.78 Profit before Taxation 1,271,058 933,983 36.09 Profit after Taxation 1,129,331 803,287 40.59
Position at the year end Shareholders’ Funds 9,450,045 7,607,108 24.23 Life Insurance Funds 38,203,473 31,868,141 19.88 Non - Life Insurance Provisions 6,536,751 6,152,883 6.24 Investments 46,988,517 33,906,686 38.58 Total Assets 61,331,796 49,332,645 24.32 Market capitalisation (Rs. Mn) 17,134 9,352 83.21
Per Ordinary Share Rs. Rs. %
Earnings (Basic) 42.75 30.41 40.59 Dividends - Interim paid - - - - proposed 6.50 5.50 18.18 Net Assets ( Shareholders’ Equity) 357.76 287.99 24.23 Market Value at the year end - voting 746.70 381.00 95.98 Market Value at the year end - non voting 343.00 270.00 27.04
Ratios Return on Total Assets % ( Shareholders’) 7.83 6.27 24.88 Return on Shareholders’ Funds % 11.95 10.56 13.16 Dividend Cover (times) 6.58 5.53 18.96 Price Earning (times) - voting 17.46 12.53 39.35 Price Earning (times) -non voting 8.02 8.88 (9.68)
Premium Income Profit before Taxtion - Life & Non Life Rs. Mn. Rs. Mn. 20,000 1,500
1,200 15,000 900 10,000 600
5,000 300
0 0 2010 2011 2007 2009 2008 2010 2011 2007 2009 2008
Ceylinco Insurance PLC 8 Annual Report 2011 Premium Income - Non Life Premium Income- Life
Rs. Mn. Rs. Mn. 12,000 10,000
10,000 8,000 8,000 6,000 6,000 4,000 4,000 2,000 2,000
0 0 2010 2011 2007 2009 2008 2010 2011 2007 2009 2008
Results for the year Non - Life Insurance Life Insurance 2011 2010 % 2011 2010 % Rs.’000 Rs.’000 change Rs.’000 Rs.’000 change Gross Written Premium 10,041,212 9,224,608 8.85 9,815,943 8,786,121 11.72 Net Claims / Net Benefits 4,475,745 4,339,864 3.13 2,946,295 2,685,361 9.72 Increase in Long Term Insurance Funds - - 6,335,332 5,418,174 16.93 Investments and Other Income 663,740 438,080 51.51 3,881,936 3,454,269 12.38
Transfer to Retained Earnings - - - 696,105 590,995 17.79 Profit before Taxation 1,271,058 933,983 36.09 - - Profit after Taxation 1,129,331 803,287 40.59 - -
Position at the year end Shareholder’ Equity 9,450,045 7,607,108 24.23 - - - Long Term Insurance Funds - - - 38,203,473 31,868,141 19.88 Non-Life Insurance Provisions 6,536,751 6,152,883 6.24 - - - Investments 6,980,966 4,531,052 54.07 40,007,550 29,375,634 36.19 Total Assets 16,240,686 14,902,609 8.98 48,246,521 36,955,617 30.55
Results for the year Non - Life Insurance Life Insurance 2011 2010 2011 2010 Rs. Mn Rs. Mn Rs. Mn Rs. Mn
Available Solvency Margin 1,828 4,006 10,280 9,947 Required Solvency Margin 1,641 1,512 1,256 1,034 Solvency Ratio (Times) 1.11 2.65 8.19 9.62
Ceylinco Insurance PLC 9 Annual Report 2011 Our Journey 1987 - 2011
1988 Ceylinco Insurance - 1987 1988 General became the first Incorporation of Ceylinco Insurance to introduce a direct sales Ceylinco Insurance commences operations force to the industry
2001 1999 2000 2000 Kurunegala branch Gampaha branch moved to First to introduce a branded Created a separate brand moved to its own newly its own newly constructed, Motor Insurance product to icon for the Life Division - constructed 5-storied 5 - storied building the market - Ceylinco VIP “Ceylinco Life” building
2004 Only Insurance Company to honour all tsunami claims, regardless of company’s liability 2005 2005 Ceylinco Life conferred First VIP Spot opened in with Overall Brand of the Warakapola to benifit Year Award by SLIM Brand long distance travellers Excellence
2007 Launch of “Family Savari” - a mega consumer promotion 2008 to benefit policyholders and 2008 First to record a profit their family members. Non-voting share issue of Rs 1 billion
2006 – 2011 Winner - Peoples’ 2010 Insurance Brand of the Completed construction Year for five consecutive of the Ceylinco Life years Tower
Ceylinco Insurance PLC 10 Annual Report 2011 1989 First to segment the 1990 market and introduce First to introduce packaged 1991 1993 a niche market policies to the market - First to introduce a Produced the first MDRT product - Sahanaya Traders Combined pension product qualifier
2003 2003 2004 2001 First to introduce On The Opening of VIP Centre - Emerged Market Leader Introduced “Ceylinco Spot claim settlement for Nawam Mawatha, in the Insurance Industry Life Pranama Motor Insurance Ceylinco dedicated to vehicle in Sri Lanka, in both Life Scholarship Scheme” VIP On The Spot Insurance and General
2003 & 2006 2007 2007 2007 Winner of ‘ Innovation First to introduce online First to introduce On The First to receive a brand rating of the Year’ at the Asia selling - for VIP , Travel Spot claim settlement for ( AA - ) With the brand Insurance Awards Classic and Marine Insurance Non Motor Insurance valued at Rs 6.7 billion
2010 2008 2008 2009 Ceylinco Insurance - First to launch public First to launch public Ceylinco Life conferred with General becomes the awareness campaign on awareness campaign on Overall Brand Leadership first Insurance Company life insurance – “Life retirement planning – as Award by World Brand to settle claims through Insurance Week” “Retirement Planning Month” Congress M-commerce
2011 Ceylinco Insurance 2008 – 2011 Honoured With Gold Winner of National Award At World Quality Business Excellence Award Commitment Awards In Paris for three years
Ceylinco Insurance PLC 11 Annual Report 2011 Ceylinco Insurance PLC 12 Annual Report 2011 Chairman’s Review I realizerealize thatthat thethe truism ‘when‘when tthehe going gets tough,tough, thethe toughtough ggetet ggoing’oing’ is ddeeplyeeply iningrainedgrained in our corporatecorporate culture.culture. ThereforeTherefore no mattermatter whatwhat threatsthreats andand challengeschallenges we havehave to face, we willwill alwaysalways overcome themthem andand achieveachieve greatergreater heights of excellence in our performance.performance.
CeylincoCeylinco Insurance PLCPLC 13 AnnualAnnual Report 2011 Heading
Chairman’sChairman’s ReviewReview
“As the market leader we are fullyfully aware that the insurance industrindustryy has a pivotal role to plaplayy in the economic developmentdevelopment of ourour CCompany”ompany”
ThisThis was tthehe tittitlele of thethe bookbook describingdescribing thethe historyhistory and became the envy of morem developed markets has of thethe compancompanyy whichwhich it was mymy privilegeprivilege to write andand now plummeted. Butut I am extremely pleased to report to whwhichich was launchedlaunched duringduring thethe llatteratter hhalfalf of tthehe yyear.ear. you our shareholdersshareholdelderslde that despite all these threats and In tthishis bbookook I describeddescribed thethe varyingvarying challengeschallenges thethe challenges yourur company has emerged victorious. 2011 companycompany hadhad to face from its foundingfounding in 1939 up to has been yetet another year of victory. Let me give youyou tthehe present times. Some of tthosehose cchallengeshallenges were nearnear some performanceperformanceerf highlights.highlights. catastrocatastrophic.phic. But because of brilliant leadershileadershipp and a s 'ROSS 7RITTEN 0REMIUM INCREASED BY 'R'ROSS 7RITTEN 0REMIUM INCREASED BY responsive and dedicated staff each of those challengeschallenges over thethe previousprevious yearyear to reachreach Rs 19.857 Billion.Billion. werewere supremelysupremely overcome and resulted in the companycompany ContributingContributing to thisthis was a Gross Written Premium emeremergingging strongerstronger than before. of Rs 10.041 BillionBillion by thethe GeneralGeneral Division andand AsAs I now review thethe performance of thethe compancompanyy for Rs 9.816 BillionBillion by thethe Life Division. ThisThis is thethe thirdthird the yeyearar 2011 I realize that the truism ‘when the gogoingoing time in thethe lastlast four yearsyears thatthat thethe GeneraGenerall Division gets tough, the tough get going’ is deeply ingraineingrainedainedain in waswas ableable to pass thethe 10 BillionBillion mark.mark. It is trulytruly a our corporate culture. Therefore no matter whwhat threats remarkableremarkable performance.performance. and challenges we have to face, we will alwaalwayslwayslwa overcome s 0ROlT "EFORE 4AX INCREASED BY AN IMPRESSIVE OVER 0ROlT "EFORE 4AX INCREASED BY AN IMPRESSIVE OVER them and achieve greater heights of excellenceexcexcellencexce in our thethe previous yearyear to reachreach Rs 1.271 BillionBillion andand Group performance. The uneven playing fielfield of the insurance Profit Before Tax increasedincreased by 38% to reachreach Rs. 1.556 industry in which all GovernmeGovernmententnt Owned Enterprises Billion.Billion. are prohibitedprohibited from givinggiving theirheir General Insurance s 4WO PRESTIGIOUS )NTERNATIONAL !WARDS WERE WON 4W O PRESTIGIOUS )NTERNATIONAL !WARDS WERE WON business to privateprivate sector insuranceinin companies,companies, even bringingbringing recognition to your company, thethe insurance if they wish to do so, stilltill continues. Alarming price industryindustry andand thethe country.country. cutting by some compcompaniesmpaniesmp which makes customers s &OR THE TH SUCCESSIVE YEAR YOUR COMPANY WAS &OR THE TH SUCCESSIVE YEAR YOUR COMPANY WAS lose confidence inn the business ethics of the insurance selected throughthrough the SLIM-Nielsen all-island surveysurvey industry, has becomebe a regular sales tactic. Competition as thethe most popularpopular insurance companycompany in thethe island.island. has increaseincreasedsedd and become much more aggressive than s -OST IMPORTANTLY FOR THE TH SUCCESSIVE YEAR YOUR -OST IMPORTANTLY FOR THE TH SUCCESSIVE YEAR YOUR last year.ar.r. TThe stock market which reached record heights companycompany retained Market Leadership.Leadership.
CeylincoCeylinco Insurance PLPLCC 14 AnnualAnnual Report 20120111 10.25% Rs. 1,271 Mn Rs. 42.75 Premium Growth Profit Before Tax Earnings per share
All this has been possible because we believe in 2010. But that optimism of economic revival was short executing every task to the best of our ability and lived. A new financial crisis began to surface in Europe honouring every commitment we make posing a threat to the global economy. Referred to as the Eurozone Sovereign Debt Crisis it was triggered off by Proposed Dividend the alarming, ever increasing levels of government debt Consequent to the outstanding performance of the in Portugal, Ireland, Italy, Greece and Spain. Connected company and in acknowledgement of the steadfast loyalty by the common currency of the euro even the strong of you our shareholders, your Board of Directors is very economies of Germany and France were shaken. It was pleased to propose a dividend of Rs. 6.50 per share which a matter of ‘swimming together or sinking together’. in the highest on record. Frantic appeals by the IMF and rescue packages amounting to over 1000 Billion seems to have reduced New players in the market the intensity of the crisis. As a result of the Eurozone financial crisis, IMF predictions are that the global Two new players – one international and the other economy will grow by 3.25 %. The Eurozone by 0.5% local, have entered the market and we welcome them . and the US by 1.8 % . In this context World Bank Chief It is hoped that with the entry of these two companies, Economist Justin Yifu Lin has cautioned developing the insurance market will expand through greater countries to “ evaluate their vulnerabilities and prepare penetration levels specially in the regions outside the for further shocks, while there is still time.” Western Province.
Political - While turbulence was the feature of the global Macro Environment economy so it was in global politics with the epicenter Economic - The beginning of 2011 saw the global being what the western media described as the Arab economy recovering in a mood of cautious optimism. Spring or Arab Awakening. During the course of the The developed economies were slowly recovering from year civil movements for regime change took place in 18 the financial tsunami which started in the late 2008 countries. The most severe being the revolution in Egypt in USA with the crash of Lehman Brothers and other and Tunisia and the civil war in Libya. Violent and bloody financial giants and then created a recessionary spiral people protests continue in Syria. In other countries the across the world throughout 2009 and the early part of protests are sporadic and comparatively less violent. But
Ceylinco Insurance PLC 15 Annual Report 2011 Chairman’s Review
the threat of uprisings getting more violent is ever present. Though the date for splitting seems a long way off your Meanwhile, Iraq is in shambles, much worse off than Board has immediately commenced a careful study before the US army invaded it, Egypt has yet to experience and evaluation of the best method of implementing the a stable government, Libya is still in turmoil. Iran is in the legal separation. May I assure you our shareholders throes of UN imposed sanctions. Thus the Arab Spring that whatever method is recommended your Board was more of a violent Summer. will be very transparent and give top most priority to safeguard your interests and the interest of our valued Despite the gloomy global scenario the Central Bank customers and that of our staff. of Sri Lanka is optimistic that Sri Lanka is resilient s #OMPULSORY LISTING OF ALL INSURANCE COMPANIES enough to withstand any shocks. Low inflation at 4.9%, unemployment at 4.3% and a steady growth of Your company has been listed from its inception 8.3% in 2011 are real and positive signs. Impressive and we welcome this regulation as it will necessitate infra-structure projects such as the first stage of the higher levels of transparency in all companies thereby Southern Highway have given a new dimension to our enabling the public to have greater confidence in the country’s progress. Furthermore the Central Bank is insurance industry. encouraging banks and large conglomerates to seek s 4HE .ATIONAL )NSURANCE 4RUST &UND .)4& TO BE credit facilities from overseas to keep the cost of capital brought under the supervision of Insurance Board of low. Tourism has grown significantly in 2011 and will Sri Lanka (IBSL): continue to grow in 2012. Even though the arrival of All insurance companies are currently compelled tourists from Europe and UK may decline there will be to give 20 % of all reinsurance and cede the Strikes/ greater increases from India, China and Russia. The 3% Riots/Civil Commotion (SRCC) and Terrorism Risks devaluation of the Sri Lanka Rupee, though it came as we accept subject to various limits, to the NITF . We a surprise, not because of the quantum of devaluation therefore welcome the new regulation because now but because of the manner of its announcement, is a the Insurance Regulator can continuously monitor decisive factor in boosting exports. Adding strength to the solvency of NITF and also other matters such the Central Bank’s optimistic outlook is the January 24th as approving their reinsurance programme. The 2012 dated Global Financial Stability Report (GFSR) Insurance Association of Sri Lanka has repeatedly of the IMF. This report states that Asian economies are brought to the notice of IBSL the delays in payment of still strong and despite a downward revision of 0.75 claim recoveries to member Companies by NITF. With percentage, the projected growth rate is 7.5% on average. the NITF coming under the supervision of IBSL the timely intervention of IBSL in this area will certainly Notwithstanding the optimistic outlook there is the help the industry to settle claims much faster. This will possibility that due to international turbulence there be a significant benefit to the insuring public. will be certain negative repercussions for Sri Lanka. If the ‘Arab Spring’ gathers intensity and spreads to other s !UTHORITY FOR )"3, TO DECIDE ON THE MINIMUM SHARE countries, employment opportunities whether for skilled capital requirement of insurance companies: or unskilled workers can get restricted. Tea exports can Hitherto whenever the Regulator wanted to increase get reduced. And with Iran isolated alternate sources for the share capital requirement it had to seek an oil have to be found, may be on less favourable terms. An amendment of the Insurance Act by Parliament. As escalation of oil prices and the resulting negative effects a result insurance companies were able to operate on the economy will be inevitable. Hence a 8% GDP for a considerable period of time with a lower share growth may be realistic. capital which was not in line with the share capital requirements of other markets. Already IBSL has Important amendments to the Insurance Act. prudently increased the share capital requirement to Rs 500 Million for Life insurance and for s 3PLITTING OF ALL COMPOSITE INSURANCE COMPANIES ON OR General insurance and could increase this from before February 2015 time to time. Furthermore IBSL has introduced a This requires that all companies handling both requirement of Risk Based Capital (RBC). From General and Life insurance will have to form two 2014 onwards companies will have to report on this separate companies, one handling only Life insurance basis and increase capital accordingly. The complete and the other handling only General Insurance. As implementation will be by 2016. shareholders you are no doubt aware that since its inception Ceylinco Insurance has been managed as s 0ERMISSION FOR )NSTITUTIONAL !GENTS TO BE APPOINTED virtually two separate entities – General and Life. Hitherto only individuals were permitted to act as Thus the new regulation will have little impact on us. agents. Your company considers the new regulation
Ceylinco Insurance PLC 16 Annual Report 2011 as another window of opportunity being opened. We that under his mature leadership the stock market will can now develop bancassurance and brandassurance soon regain its position as a vibrant and successful products. Furthermore , we can develop micro market attracting recognized foreign investors. insurance products and through micro credit agencies reach new sections of the population. We therefore I now pay tribute to our customers. Their continuous eagerly await the guidelines from IBSL regarding the and ever increasing loyalty will be most certainly appointment of institutional agents. reciprocated by the company by offering the highest form of service excellence. s 2EGISTRATION OF )NDEPENDENT ,OSS !DJUSTORS This is yet another progressive move which we I thank our entire staff (and here I include the welcome. It will bring Loss Adjustors under the Consultants of the Life Division) for their loyalty and supervision of IBSL thereby increasing the confidence commitment which has resulted in another year of of the public in the insurance industry. victory for the company and I assure them that in the most meaningful way we will continue to demonstrate As the market leader we are fully aware that the that they are our most valuable asset. insurance industry has a pivotal role to play in the economic development of our country. We look upon I now thank all our Agents and the Insurance Brokers the new regulations as important factors by which that who have steadfastly continued to support us by pivotal role can be played. bringing in significant business. My Thanks To our Reinsurers and Reinsurance Brokers who are It is with the greatest of pleasure that I fulfill my duty to our business partners, I offer my sincere and most thank the many persons and organizations in which they meaningful thanks. Throughout the year under review serve, with whom this company is closely linked. they have been totally loyal to us and offered a unique service without which we would not have been able to Mr. Ajith Nivaard Cabral, Governor of the Central achieve the success we did. Bank of Sri Lanka for his leadership in taking the right decisions to keep the Sri Lankan economy moving I offer my most sincere thanks to the two Managing forward which has contributed to the growth of the Directors / CEOs Mr Ajith Gunawardena and Mr insurance industry. Rajkumar Renganathan for having once again demonstrated their unique leadership qualities by Mrs. Indrani Sugathadasa, Chairperson of the Insurance steering this company through tough competitive Board of Sri Lanka (IBSL) and for the greater part of conditions to become the No 1 insurance company. the year Chairperson of the Securities and Exchange Commission of Sri Lanka (SEC) for the regulatory It is my very pleasant duty to thank the Board of services provided by her and the Directorate of both Directors who through professionalism and devotion institutions. In particular I wish to thank her for the very to duty have placed this company in an unassailable progressive measures introduced through the recent position in the industry. amendments to the Insurance Act. It is said that the best are recognised the last, and so Dr Wickrema Weerasuriya Insurance Ombudsman for to you our Shareholders I extend my most abundant his diligence and impartiality in dealing with grievances thanks. Your steadfast loyalty and your trust will never be of customers thereby restoring the confidence of these betrayed no matter what changes lie ahead. customers in the insurance industry.
It is an appropriate and pleasant duty for me to welcome the newly appointed Director General of IBSL Mr Chandri Gunawardhana. I wish him well and I am confident that his professionalism will be a significant asset to the industry. J.G.P. Perera At the same time it is appropriate and equally pleasant Chairman for me to welcome Mr Tilak Karunanayake who has been appointed as Chairman of the SEC. I am confident 23rd. February, 2012
Ceylinco Insurance PLC 17 Annual Report 2011
Review of the Managing Director / Chief Executive Officer (General Insurance)Insurance)
WeWe are committedcommitted to manage ourour businessbusiness withwith great ddisciplineiscipline anandd prudenceprudence ratherrather thanthan merrilymerrily increasing our marketmarket share.share.
CeylincoCeylinco Insurance PLCPLC 19 AnnualAnnual Report 20112011 Review of the ManagingManaging Director / Chief Executive Officer (General InsuranceInsurance))
“In risingrising to everyevery challenge,challenge, wewe hhaveave endured.endured. In adheringadhering to soundsound ffundamentals,undamentals, we havehave succeeded.”succeeded.”
OutlookOutlook CompanyCompany PerformancPerformanceance TheThe availableavailable statistics indicateindicate thatthat bbuildinguilding on sounsoundd 2011 marked anotheranototherothh sisignificantgnificant year,year, in which yoyourur economic funfundamentals,damentals, Sri Lanka’sLanka’s economy hadhad grown company overcameovercaercarcame all challenges that came its way. The by 7.9% in thethe first quarter, 8.2% in thethe 2nd2nd quarter andand General DivisionDivi surpassed the Rs.10 billion mark in 8.4% in tthehe 3r3rdd quarterquarter of 2011. In thethe thirdthird quarter,quarter, premiumum income, recording Rs.10,041 million, signifying construction hadhad grown at 17.3%, industryindustry at 10.8%,10.8%, a grgrowthowthow of 9% yearyear on year.year. Thus, the Motor InsuranceInsurance services at 7.8%, anandd agricultureagriculture at 6.2%. Meanwhile,Meanwhile, premiumpre income stood at Rs.6,031 million, while the inindustrialdustrial growtgrowthh hadhad beenbeen supportedsupported byby mining andand non-motor premium income contributed Rs.4,010 mineramineralsls growinggrowing at a staggeringstaggering 19.6%, services by millionmillion to the ddivisionivision coffers.coffers. hhotels/restaurantsotels/restaurants growinggrowing at a phenomenalphenomenal 27.2%, and agriculture by paddy, growing at a steady 12.4%,, TheThe profitabilityprofitability of tthehe company duringduring thethe year ununderder continuing to recover from the impact of the floods.floodsods.ods review was pphenomenal,henomenal, recordingrecording a monumentalmonumental Exports had shown a growth rate of 23.4% in ththe first increase over thethe previous year.year. Your compancompanyy was ableable ten months of 2011. Meanwhile, tourist earniearningsrnings had to recordrecord a pprofitrofit after tax of over Rs.1.1 billionbillion (Rs.1,129 closed in on US$ 800 million, Foreign DirDirectDir Investment million),million), whichwhich marmarkedked an over 41% increase over 2010. hovered round US$ 1 billion, and foreignforeigreignreig remittances TheThe GeneralGeneral Division of CeylincoCeylinco Insurance contributedcontributed had approached US$ 5 billion, all by the end of 2011 – to thisthis massive increase witwithh a mammotmammothh pprofitrofit bbeforeefore all three indicators, the highestt rerecorded in Sri Lankan tax of Rs 575 million,million, whichwhich cclearlylearly indicatedindicated a growthgrowth history. AccordingAccordingly,ly, Sri Lankanka is projectingprojecting an overall of 68 % year on year, whilewhile thethe after tax profit of tthehe economic growth of 8.3%% for 2011. However, although GeneralGeneral Division rose to Rs 433 million,million, sisignifyinggnifying an a huge economic upswingupswswiwingi is yet to materialise, the increase ofof 104 %. economic indicatorsors pose a gargantuan success story for the ffuture.uture. UnmatchedUnmatched Benefits To Customers In keeping with our age-old credo to provide the bestbest possiblepossible service to our customers at aallll times, tthehe GeneralGeneral
CeylincoCeylinco Insurance PLPLCC 20 AnnualAnnual Report 2011 Rs. 10,041 Mn 8.85% Rs. 574.9 Mn Gross Premium Premium Growth Profit Before Tax
Division paid gross claims amounting to Rs.5 billion Meanwhile, yet another innovation that was introduced during the entirety of 2011. Moreover, celebrating our during the year under review, which offered a host of pioneering On The Spot claim settlement methodology benefits, was the Ceylinco VIP Three Wheel Cover. further, your company remained the only insurance Encompassing a series of hitherto unseen benefits for company in Sri Lanka to do so still, with a large volume three wheel owners and their families, the new cover of all claims paid, settled on the spot. was set to immensely benefit over 500,000 three wheel owners. The cover included such unique benefits as a In the pursuit to widen the coverage of our insurance payment of Rs.100,000 to the family, in the event of the solutions, while continuously striving to add value to demise of the three wheel driver, as well as the payment the services we provide, combined with our quest for of balance lease instalments, up to Rs.100,000, payment even more innovative concepts, Ceylinco Insurance for third party property damage of up to Rs.200,000 and introduced yet another breakthrough in motor compensation for up to three passengers, for injuries insurance, with the introduction of Warranty Insurance sustained, in the event of an accident. for the motoring public of Sri Lanka. The distinct advantage in Warranty Insurance is that it pays for the mechanical defects of the parts insured, unlike in Financial Indicators regular vehicle insurance, which only settles claims if a The unyielding stability and strength of your company vehicle meets with an accident. Adding further incentive was once again plainly visible, as our voting share, once to this innovative concept, re-conditioned vehicles again, for the third consecutive year in 2011, fetched the that were covered under the Warranty Insurance for highest price amongst banks and insurance companies the first year from the date of purchase, along with all at the stock exchange: Rs.950 being the highest price brand new vehicles, were given an extended warranty traded. Meanwhile, the non-voting share too fetched of up to two years, on top of the warranty given by the Rs.369, at its highest point. manufacturer/dealer. Accordingly, the new insurance scheme was hailed as yet another industry first by Ceylinco Insurance, enhancing and adding value to the very concept of motor insurance.
Ceylinco Insurance PLC 21 Annual Report 2011 Review of the Managing Director / Chief Executive Officer (General Insurance)
Human Resources Insurance received the prestigious World Quality Your company has always maintained that the people Commitment Gold Award, at the World Quality that work for us are the key to our continued and Commitment Convention, at the International Quality resounding success in the insurance arena. In this Awards 2011, held in Paris. This award alone speaks for vein, several strategies were implemented to obtain the your company’s primary concern: unwavering quality maximum participation of the staff, while our City Office and commitment to customers at all times. was re-structured, as a direct result of innovative ideas put forward by our own staff members. Further, Ceylinco Insurance, once again in 2011, consolidated its position as the trail blazer in the Sri The human resource being the main strength in Lankan insurance industry, winning the “People’s enabling your company to face any challenge undaunted, Insurance Brand of the Year” for the fifth consecutive we consider motivation the key. Thus, constant year. Your company also bagged top honours for training, continuous evaluation processes and in-house the third time, when it emerged the winner in ‘The examinations continued during the year under review, Insurance Sector’ at the National Business Excellence preparing our gallant men and women for any challenge. Awards 2011, which significantly benchmarked corporate performance and excellence.
Distribution Network Meanwhile, the widely respected business magazine - Knowing full well that the speed with which we get to Lanka Monthly Digest (LMD), in its December 2011 any location in Sri Lanka is the primary ingredient in edition, ranked Ceylinco Insurance once again, in the our success, our expansion plan saw our number of top slot, as the highest ranked insurance company in the sales outlets increased to 95. Accordingly, the combined island. strength of our distribution points, branches and outlets now stand at 290, maintaining our position of owning Regulatory Changes the largest network in the sphere of insurance in Sri Lanka. The constant upgrading of this very network Ceylinco Insurance is always welcoming and extremely is of paramount importance to us in order to meet the supportive of regulations, which seek to increase the demand in increasingly innovative and sophisticated overall quality of the insurance industry. Accordingly, insurance solutions. amendments to legislation came into effect during 2011. As such, amendments to the insurance Act effective February 2011 requires all composit insurance Overseas Operations companies in business in Sri Lanka, to split as separate Your Company had invested in joint ventures and entities for General and Life Insurance. According enterd in to strategic alliances beyond the shores of Sri to the Act, the split must be affected before February Lanka over several years, firmly believing in establishing 2015. However, this regulatory change will only have international roots. Thus, we capitalised on the a minimum impact on your company, which already opportunity to roll out some of our products to migrant features separate General and Life Divisions, although workers in the Middle East. The venture was successfully careful preparations are already underway to comply implemented through strategic alliances with companies with the amendments. in the Middle East: United Arab Emirates, Bahrain, Kuwait, Oman and Qatar. Meanwhile, combined with Further legislation saw the compulsory listing of all our ongoing joint ventures in Nepal and the Maldives, insurance companies, the increase of minimum share our position as a regional player in the global insurance capital and risk based capital; all requirements which arena, has considerably strengthened. In this vein, must be implemented by 2016. the Philippines is the latest addition to our growing international presence, where we assists a local company Industry Overview in product development and marketing. During the year under review, the General Insurance Industry was expected to record a growth of over 20%, Accolades with total premium income reaching Rs.45 billion by the In this continuing saga and in an affirmation of the end of 2011. This bodes well for the insurance industry outstanding quality offered to customers, Ceylinco at large, as the very concept of insurance seems to be
Ceylinco Insurance PLC 22 Annual Report 2011 establishing itself firmly in the Sri Lankan psyche. This we will capitalise on the immense opportunities that moreover, sets the ideal stage for the industry to grow will no doubt, come our way. Meanwhile, we will strive exponentially in the future, keeping pace with the robust to further enhance our image as a trusted entity in the Sri Lankan economy. Meanwhile, the Life Insurance market place, while continuing our yeoman service to Industry also recorded a phenomenal growth of 13%, society, as a responsible corporate citizen. with premiums surpassing the Rs 35 billion mark. However, motor insurance remained the highest growth Thank You sector, recording a growth of 27% year on year, with total Finally, it falls to me to extend my heartfelt thanks to all premium income standing at a staggering Rs.27 billion. our stakeholders, who are fundamentally a part of the During 2011, two new players entered the industry, noble business of insurance. A special mention must bringing the total number of players in General be made of our loyal and steadfast customers, whose Insurance to eighteen. continued faith and trust mean the world to us. My warmest wishes and thanks go out to the Insurance Meanwhile, an area of primary concern for the insurance Board of Sri Lanka, its Chairperson, its Board of industry will be the natural catastrophes that have Directors and staff. Simultaneously, we extend a warm ravaged the Asian region and indeed, the world, in the welcome to the new Director General. recent past, which have claimed thousands of lives and resulted in financial losses amounting to billions of We firmly believe that the IBSL extends yeoman service Rupees . Although we are unable to predict such havoc, to the industry at large, providing and implementing it is the bounden duty of the insurance industry to the necessary regulatory fundamentals for this dynamic help in rebuilding such communities and economies. business. A warm thank you also goes out to all the Moreover, this highlights the need for insurers to government authorities that we liaise with, specially increase their efforts in analysing risks in much greater the Governor of the Central Bank and its officers for detail, while providing insurance at affordable rates. their relentless service towards developing the economy Further, it remains incumbent upon the industry at large and I acknowledge their unwavering support in our to play a pivotal role in educating the masses about the every endeavour. My humble thanks are also extended manifold benefits of insurance. to our eminent reinsurers, whose undeniable strength and stability have provided us the strong foundations Furthermore, as mentioned in most of my on which to grow to the very zenith of the insurance communications throughout the last year, the insurance industry. My salutations are also extended to our industry is at present, not a level playing field. It offers insurance agents and brokers, whose efforts have always advantages to public sector insurance companies, which stood us in good stead. I salute my colleagues on the many see as an unhealthy situation for the industry Board, whose guidance and friendship has been a key at large. Meanwhile, price undercutting still remains a strength for me. Finally, my warmest thanks are extended hindrance to the vibrancy and growth of the insurance to our staff, whose dedication, commitment and loyalty industry. are beyond parallel, and without whose untiring efforts, we will not be where we are today. I conclude by saying that with the winning combination we possess in every The Future sphere of the business of insurance, and the country Despite ongoing crises in Europe and the US, the poised on the threshold of the fast-track to development, Sri Lankan economy is projected to grow by 8% during the possibilities are as immense, as they are endless. 2012. Undoubtedly, the insurance industry will grow Let us look forward with unbounded optimism to a simultaneously, as when the economy expands, there will prosperous 2012. simply be more assets to protect.
Accordingly, your company will continue to engender innovative, new insurance solutions and remain focused on the central figure that drives our business: the A. R. Gunawardena customer. However, as always, we will keep a critical Managing Director / Chief Executive Officer eye on key business indicators. We are committed to (General Insurance) manage our business with great discipline and prudence, and rather than merrily increasing our market share, 23rd. February, 2012
Ceylinco Insurance PLC 23 Annual Report 2011
Review of the Managing Director / Chief Executive Officer (Life(Life Insurance)Insurance) ThisThis isis a sacredsacred trusttrust andand wewe oweowe itit toto our popolicyholders’licyholders’ to ensure tthathat ttheirheir hhard-earnedard-earned monies are managemanagedd witwithh tthehe utmost proprobity.bity.
CeylincoCeylinco Insurance PLCPLC 2525 AnnualAnnual Report 20112011 Review of the ManagingManaging Director / ChiefChief Executive OfficerOfficer (Life(Life Insurance)Insurance)
“In matters of style,style, swim with the currentcurrent;; in matters ofof principle,principle, stand like a rock” ThomasThomas JeffersonJefferson
TooToo often, businessesbusinesses are temptedtempted to swim withwith thethe current for shortshort term gaingain andand can, at times, overlookoverlook LeadLead in PremiumPrP emium IncomeIncome overr 2nd2n largest life insurerinsurer or straystray from thethe fundamentalfundamental principlesprinciples thatthat drivedrive Rupees Millionlion theirtheir raison d’êtred’être -- theirtheir core business.business. Sadly,Sadly, we havehave 2,5002,500 seen examplesexamples of thisthis in our industryindustry too andand whilewhile ourour 22,000,000 shareholdersshareholders may taketake heartheart from thethe fact tthathat it is thethe 2,002,00000000 competition thatthat is guilty,guilty, whatwhat ddiminishesiminishes one pplayerlayer 11,500,500 can, especiallyespecially in thethe financialfinancial services sector, adverselyadversely 1,000 impactimpact on publicpublic perceptionperception andand affect all.all. 11,000,000
500 At Ceylinco Life, we believe that our reason for existencecee 175175 240 is to provideprovide longlong term financialfinancial protection to our 0 policyholders and their families against the uncertaintiesuncertairtaitainties 1Q20111Q2011 2Q20112Q2011 3Q20113Q2011 4Q20114Q2011 of the future. This is a sacred trust and we owe itit to ourour policyholders’ to ensure that their hard-earnedhard-earnernedrne monies are managedmanaged with the utmost probity.probity. Inn short,sh we have no business whatsoever to risk their moneymo on volatile CeylincoCeylinco Life andand thethe closestclosest competitor in 2011, investmentsinvestments susuchch as ththee stocstockk mamarket.rket. deliveringdelivering a strong message thatthat we hopehope thethe industryindustry willwill heed.heed. This approach,approach, of steadfastlysteadfastlly applyingapplying ourselves to the businessbusiness ooff LifeLife InsuranceInsuranncec andand constantlyconstantly seeseekingking to CeylincoCeylinco Life willwill continue to placeplace great emphasisemphasis improve the quality of ouro traditional, core product in thethe years ahead,ahead, on developingdeveloping its lifelife insurance -- PProtectionrotection -- continuescon to generate solid growth for competencies, secure in thethe knowledgeknowledge thatthat your company,, andan has kept us at the Number One spot professionalism,professionalism, bestbest practice, thoughtfulthoughtful leadershipleadership andand in our sectoror forf the eighth consecutive year. We havehave,, aboveabove all,all, integrity andand accountabilityaccountability are thethe true driversdrivers in fact, increasedincncreasedncr the gap in premium income between of growthgrowth in a marketmarket likelike Sri Lanka,Lanka, wherewhere disposabledisposable
CeylincoCeylinco Insurance PLPLCC 26 AnnualAnnual Report 2011 Rs. 6,335 Mn 11.72% Rs. 700 Mn Life Fund Growth Premium Growth Transfer to Shareholders’ Fund
incomes remain under pressure and just over 10 per cent We made a net transfer of Rs 6.3 billion to our Life Fund of the populace is protected with insurance. The need for the 12 months, an increase of Rs 917 million or 16.9 for life insurance remains strong and we believe it is the per cent over the previous year’s transfer. As a result, the responsibility of all players in the industry to find ways Life Fund grew by 19.9 per cent to Rs 38.2 billion. to take their products to the masses profitably, without placing the hard-earned monies of their policyholders at I am pleased to report that this growth was organic: risk. the Life Division sold 143,259 new policies in 2011, at an average of nearly 12,000 per month. Prudent In this matter of principle, Ceylinco Life will stand like a and strategic management of our investment portfolio rock. complemented operational performance. At the end of the year, the Life Division’s investment portfolio Performance comprised of Government Securities (32 per cent); Licensed Private Banks (24 per cent); State Banks (21 The Life Division recorded a total income of Rs 13.698 per cent); Real Estate (12 per cent); Corporate Debt billion and Gross Written Premium Income of Rs 9.816 (6 per cent) and Others (5 per cent). billion in the year reviewed, once again emphatically maintaining its position as the country’s leading life Total Assets grew by Rs 11.3 billion or 31 per cent to insurer for the eighth year consecutively. This represents Rs 48.3 billion at 31st December 2011. The revaluation a growth of 11.72 per cent in premium income over surplus (a computation every three years of the 2010, and is noteworthy in the context of the somewhat difference between the book value and market value of non-conducive conditions that prevailed for the sale assets) increased to Rs 1087 million. of life insurance. Investment & Other Income grew 12.38 per cent to Rs 3.882 billion, without recourse to It is also important to note that we continue to deliver venturing into mercurial investment options, as stressed handsomely on shareholder value. A net transfer Rs 700 in my preamble to this review. Total investments of the million was made to shareholders from the profits made Life Division increased by Rs 10.632 billion or 36 per by the Life Fund in 2011. This is the highest transfer to cent to Rs 40 billion at the end of 2011. shareholders to date.
Ceylinco Insurance PLC 27 Annual Report 2011 Review of the Managing Director / Chief Executive Officer (Life Insurance)
Significantly, all of this was achieved while maintaining The ‘Pranama’ scholarships programme in its 10th year, our solvency margin at pristine levels. A computation of presented 142 new scholarships worth Rs 7.6 million in the excess of assets over statutory liabilities, the Solvency 2011. This resulted in total disbursements by the Life Margin is the yardstick used to assess an insurance Division under this programme increasing to Rs 50 company’s ability to meet the obligations arising from its million. insurance contracts at any time. I am proud to report that the Life Division’s Solvency Margin as at 31st December We also launched a ‘Premium Club’ exclusively for 2011 was more than eight times the legal requirement. our high net worth policyholders. Twenty of these policyholders have been conferred Platinum status and Ceylinco Life is now well placed for further organic were treated to a seaplane excursion to the hill country growth in the years ahead. The base is solid, and we have capital Kandy. Accompanied by their family members, achieved an operational momentum and professional these policyholders were accorded this exclusive reward depth to face the changes and challenges ahead. The for their loyalty. This was the first instance that an trend of increasing interest rates, while not favourable insurance company in Sri Lanka had used the SriLankan to the country, will be beneficial to the life fund. We Airlines air taxi service for a loyalty rewards programme. welcome steps by the Insurance Board of Sri Lanka (IBSL) that require insurance companies to separate Market expansion their Life and General operations; the change of the basis As part of your company’s continuing commitment to of valuation from the net premium model to the gross creating nation-wide awareness of the importance of premium model and the proposed risk-based capital life insurance, we successfully conducted yet another model for insurance companies. Our accounts are now Life Insurance Week (LIW) programme, as well as a fully IFRS compliant, and our processes and systems are Retirement Planning Month (RPM) initiative. As in past geared for expansion. years, these efforts concentrated on provincial towns and rural areas. Our widespread network of branches, now Benefits to policyholders exceeding 180, and our 5,000-strong sales force make The Life Division paid Rs 2.9 billion in claims, maturing programmes such as these effective, and benefit the benefits and other benefits in the year ended 31st industry as a whole. December 2011. Over 95 per cent of all intimated death claims were settled during the year, maintaining our We also widened the scope of our ‘Family Savari’ record as the best in settlement of claims in Sri Lanka’s promotion, with the addition of China as a destination. life insurance sector. Benefits included annual bonuses, The promotion, which contributes significantly to claims, maturity and other survival benefits. We also paid the sale of new policies, will reward a total of 565 out Rs 38.1 million as ‘Avurudu’ cash bonuses to 9,695 policyholders and their families in 2012, with tours to long-standing policyholders, taking the total value of China and Singapore and a day’s outing at the Leisure Avurudu Cash bonuses paid over the last eight years to World theme park. Rs. 206 million. Branch network There is another matter of principle, in which Ceylinco The Life Division further strengthened its branch Life stands like a rock, and that is our long-standing network in 2011 with a new branch building in commitment to the community and the wellbeing of Kurunegala, a new City Office at our former head office our policyholders. Our community welfare initiatives in Colombo 3 and a new building under construction in continued apace in the year reviewed. The construction Gampaha which will house all the branches in Gampaha. of classrooms for needy rural schools and our projects The new City Office accommodates a Call and Customer clustered under the ‘A Healthy Nation’ community Relationship Management (CRM) centre, the Audit agenda are just two examples that come to mind. These Division, Central Payments Division, Quality Assurance efforts are elaborated on elsewhere in this report. Our Division, a gift shop and the Group Assurance Division. ‘Family Savari’ programme, easily the biggest interactive The new Kurunegala branch and the Gampaha branch promotion in the insurance sector, also continued to are housed in custom-built buildings owned by the Life grow in scope and innovation. Division and increase the number of such branches in
Ceylinco Insurance PLC 28 Annual Report 2011 company-owned buildings to 29. Work also commenced Healthcare on a new branch building in Jaffna, which we plan to Ceylinco Healthcare Services Limited (CHSL), our open on 28th March 2012. pioneering health care subsidiary, progressed to plan in 2011. We continue to focus on offering preventive Achievements medicare through screening for diabetes and cancer and I have already referred briefly to your company’s the provision of state-of-the-art radiation treatment in enduring commitment to the needs of the communities a comfortable non-hospital atmosphere. The facilities we serve. There can be no better endorsement of this we own offer a cost-effective alternative to travelling commitment than local and international recognition. I overseas for treatment, and also play a role in creating take pride therefore in reporting that the Life Division better awareness of the increasing incidence of diabetes won the overall award for ‘Best Corporate Social in our country and the importance of prevention and Responsibility Practices’ at the second CMO Asia good management of the condition. Awards for Excellence in Branding and Marketing, presented in Singapore. Ceylinco Life was the only Sri The future Lankan company in the insurance sector to win an Escalating fuel costs and the consequential rise in award at this prestigious event. the cost of living in Sri Lanka, combined with higher interest rates, may pose a challenge to the expansion This latest award was a strong affirmation of our flagship of the market for life insurance by exerting further CSR initiative titled ‘A Healthy Nation,’ which is a pressure on disposable incomes. Inflation could also multifaceted portfolio of health-related initiatives built lead to an increase in default in premium payments. We around the ‘Waidya Hamuwa’ series of free medical would therefore be required to intensify our messaging camps conducted by teams of travelling doctors, the and our level of interaction with our customers. Steps series of educational seminars for pregnant mothers have already been taken to centralise customer service titled ‘Senehasaka Udanaya,’ the series of blood donation operations and to further leverage our IT competencies camps conducted country-wide with the National Blood to enhance access to information and convenience of Transfusion Service (NBTS) and the educational and payment for policyholders. We are confident that we awareness programmes conducted for communities at have achieved the operational width and the professional risk from Thalassaemia. These programmes have been depth to grow even in challenging conditions. Above all, running for several years now, and our policyholders are we have earned and retained the trust of our customers familiar with them. Details of the specific programmes by, in matters of principle, standing like a rock. conducted in 2011 can be found elsewhere in this report. In conclusion, I would like to quote the words of the The community famous US golfer Jack Nicklaus – ‘Learn the fundamentals It would be fair to say that the Life Division’s of the game and stick to them. Band-Aid remedies never last.’ commitment to underserved communities, especially I thank my fellow Directors, the staff, sales force, in the areas of healthcare and education is so well established as to need no further elaboration in this policyholders, shareholders and regulators for their section. The work done in 2011, in the form of free support, advice and goodwill in 2011. health camps conducted across the country, and the construction of classrooms for 10 schools, is reported on in some detail in the appropriate section. We believe that our understanding of the priority needs of people in rural Sri Lanka, and the passion with which we seek R. Renganathan to address them through centrally-funded community Managing Director / Chief Executive Officer projects, is a distinguishing and defining characteristic of (Life Insurance) Ceylinco Life. All projects planned for the year reviewed were completed, and we intend to vigorously continue 23rd. February, 2012 our initiatives in the year ahead.
Ceylinco Insurance PLC 29 Annual Report 2011 Customer Testimonials
Because Thaththa always thought about the future, he had invested in a life insurance policy from Ceylinco Life. Thanks to him, we received a large insurance settlement and did not have to worry about our education. Today we have no worries about our future. Kosala and Kaushalya Maduranganee Jayakoky Ceylinco Life Insurance Beneficiaries - Nochchiyagama
I’m Rakitha Perera and I would like to take this opportunity to thank Mr. R. Renganathan and the whole committee of Ceylinco Life Pranama Scholarship Awards for appreciating our talents and achievements, giving us financial aid towards our further studies to become future leaders. Pathirage Rakitha Nuwan Perera Merit Winner Ceylinco Life Pranama Scholarship – 2011
I’m very happy about being given the chance to go on a trip to Singapore. This was only possible because I paid my premiums on time.
C. K Vitharana Policyholder - Mawarala
Ceylinco Insurance PLC 30 Annual Report 2011 Ever since the fire broke out in my factory, the corporation extended by your staff in so many ways is unbelievable. They were in constant touch with me and offered assistance which was a great consolation at a time when I was in distress. I’am ever grateful to Ceylinco Insurance for their promptness and the on the Spot claim settlement, which compensated for my colossal loss in time. If not for the timely action of Ceylinco Insurance, over 3,000 employees and business partners and customers would have had faced great difficulties.
H. T. Aruna De Silva Chairman - Evergreen Plantation (Pvt) Ltd.
When my factory was totally gutted, the manner in which you responded was amazing. If not for the timely intervention of Ceylinco Insurance, I would never have had my factory back in operation in such quick time. I am truly glad that I chose Ceylinco Insurance as my insurance partner, a decision which you have completely justified.
Mr. Chanaka Perera Managing Director - Upper Balangoda Tea Factory
Whenever a vehicle of ours meets with an accident your engineers turn-up at the accident site in next to no time and attend to the settlement extremely fast. This makes our life so much easier and strengthens our relationship even further. A special mention must be made regarding the excellent manner in which you handled my claim when one of my vehicles had to be removed from the fleet due to extensive damages.
Mr. P. G. W. Sirisena Managing Director - Araliya Group of Companies
“Customer satisfaction is one of our greatest priorities. Here we are proud to present some of the commendations we have received from our customers for the quality of our work and our commitment to their success.”
Ceylinco Insurance PLC 31 Annual Report 2011
Management Discussion & Analysis
“Improved macroeconomic environment, increased capacity consumption together with growth of economic activity in the Northern and Eastern provinces and enhanced external demand underpinned the high growth momentum.” Management Discussion & Analysis
Macro Economic Environment in 2011 The current account recorded a deficit of US Dollars Improved macroeconomic environment, increased 3,999 million in the first nine months of 2011. The capacity consumption together with growth of economic deficit was mainly due to the widening trade deficit on activity in the Northern and Eastern provinces and account of increased import expenditure as a result of enhanced external demand underpinned the high both volume and price increases. However, the majority growth momentum. The Sri Lankan economy achieved of the deficit in the trade account was offset by workers’ an impressive growth of 8% during the first half of 2011 remittances and the surplus in the service account. compared to the growth of 7.8% in the first half of 2010. Exports and Imports 2011 This growth was mainly due to the strong performance US$ Mn in the Industry and Services sectors as Agricultural 2,000 sector showed a setback due to adverse weather 1,800 1,600 conditions at the beginning of the year. 1,400 1,200 1,000 Contributions to the growth by main sectors for year 800 2011 (First half) 600 400 200 s )NDUSTRY SECTOR RECORDED GROWTH COMPARED TO 0 Jan Feb mar apr may jun jul aug sep oct nov dec the 8% growth in 2010. Imports Exports s 3ERVICES SECTOR GREW BY COMPARED TO THE achieved during the first half of 2010. Realized FDIs, including loans, increased to US Dollars 413 million compared to US Dollars 208 million in the s !GRICULTURAL PRODUCTION CONTRIBUTED COMPARED corresponding period of 2010. Largest part of inflows of to the growth of 7.8% recorded during first half of FDIs was attracted by the tourism sector, especially hotel 2010. and shopping complex projects. .
External Sector Developments Inflation External trade remained strong, services exports Inflation continued to remain at a single digit level expanded supported by healthy growth in the during the first eleven months of 2011. Year-on-year transportation and tourism sectors, while inward inflation as measured by the Colombo Consumers’ Price workers’ remittances continued to be the foremost Index (CCPI) was 4.9% in December 2011, while the foreign exchange earner. Spurred by higher commodity annual average rate of inflation was 6.7%. Improvements prices and increased volumes, earnings from exports in domestic food supply, including the contribution from and expenditure on imports increased in the first nine Northern and Eastern provinces, supported by favorable months of 2011. weather conditions since the second quarter of the year, moderated the supply side price pressures. Meanwhile, In cumulative terms, for the first nine months of 2011, continuous liquidity management efforts of the Central the earnings from exports and expenditure on imports Bank controlled the buildup of demand side inflationary have increased by 22.2 % to US dollars 9,581 million pressures. and 53.2 % to US dollars 18,417 million, respectively. As a result, the trade deficit expanded to US dollars Tourism 8,835 million. Part of the trade deficit is on account of government related project imports which have During year 2011, total number of tourist arrivals been funded mainly by foreign loans obtained by the recorded was 855,975 as opposed to 654,476 in 2010, Government. For the first nine months of 2011, total which is a 30.8% annual growth. While being achieving inflows to the government, including the proceeds of the 2011 tourist arrival target, they have now embarked the International Sovereign Bond issue, amounted to US on a projected target of 2.6 million tourists by 2016. dollars 4,027 million.
Ceylinco Insurance PLC 34 Annual Report 2011 aggregates, which would, in turn, help to curb the build- Tourists Arrivals up of demand pressures. Nos. 100,000 Prospects for 2012 80,000 The economy of Sri Lanka is projected to grow at 60,000 around 8.0% in 2012 and the growth is expected to
40,000 be broad based with positive contributions from all key sectors of the economy. The Agriculture sector is 20,000 expected to enhance its contribution to overall economic 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec growth benefiting from further expansion of the extent
2010 2011 of cultivation in the Northern and Eastern provinces, improved productivity and support services provided by the government. The Industry sector would also Government Finance & Monetary Policy expand in 2012, particularly with the contribution Fiscal policy in 2011 was mainly focused on further from the expansion in factory industry output with strengthening the fiscal consolidation as per the targets the expected increase in demand being generated from set out in the Medium Term Macro Fiscal Framework both domestic and international markets, and the (MTMFF), and reducing the budget deficit from 8% in contribution from increased construction activity, food 2010 to 6.8% in 2011. The improvement in the overall processing, rubber based industries and new industries fiscal situation was mainly expected through increased such as ship and boat building. Meanwhile, the Services government revenue, and containment of recurrent sector is projected to expand with positive contributions expenditure while maintaining public investment at a from all sub-sectors including domestic and foreign targeted level. trade, tourism, transportation, telecommunications and financial services. Total revenue increased by 16.2% to Rs. 576 billion during the first eight months of 2011. As a percentage However there are a few challenges the country needs of estimated GDP, government revenue for the first to focus on.Uncertainties arising from the ongoing eight months of 2011 remained at 8.8% as in the sovereign debt crises in the Euro Zone, unrest in Arab corresponding period of 2010. Meanwhile, total countries and the political pressure thrust upon by the expenditure and net lending during the first eight western powers, would have a profound impact on the months of 2011 contained at 14.3% of GDP compared economy unless the Government counters them with to 14.6% in the same period of the previous year, successful strategies. although in nominal terms, it increased by 13.9 % to Rs.931 billion during the period. More importantly Insurance Industry recurrent expenditure declined to 10.6% of GDP during The Insurance sector recorded a higher growth in terms this period from 11.3% in the corresponding period of of premium income during the year 2011. The total the previous year. gross written premiums (GWP) of insurance companies In respect of monetary developments, credit obtained by rose by 17% to Rs. 80, 202 million in the year of 2011 the private sector remained robust through 2011, and compared with the year 2010. The total GWP represents by November, recorded a year-on-year growth of 33.5%. long-term insurance premium of Rs. 35,129 million with Largely reflecting the robust expansion of credit, broad an increase of 13%compared to the previous year and money growth also remained at a level higher than that general insurance premium of Rs.45,073 million with an projected for 2011. Year-on-year growth of broad money increase of 21% compared to the previous year. There was 20.6% by November. However, market interest are 19 insurance companies in operation, of which 12 rates moved upwards in recent months, in line with companies are composite insurers, while 5 companies changing liquidity conditions in the domestic money engage exclusively in general insurance and 2 companies market. These moderate upward movements in interest conduct only long-term insurance business. rates are likely to exert a restraining effect on monetary
Ceylinco Insurance PLC 35 Annual Report 2011 Management Discussion & Analysis
The high growth recorded in the non-life insurance Premium (%) -2011 market was mainly due to the motor insurance sector. During the year 2011 the motor vehicle imports has recorded a significant growth resulting the non-life insurance market growth rate being invigorated.
The value of Imports - Vehicle’s Sector
Rs. Bn 250
200 Non - Life Life
150
100 The Insurance Board of Sri Lanka (IBSL) as the insurance regulator has taken measures to introduce 50 international developments such as transformation of 0 02 03 04 05 06 07 08 09 10 11 the rules-based supervisory system to a risk – based Year (2002 - 2011) capital model (RBC). This transformation will help to ascertain varying risk profiles of different insurers and to be consistent with the international best practices and The gradual increase in per capita GNP during the last emerging standards of the International Association of few years has created opportunities for life insurance Insurance Supervisors (IAIS). market. However, it is noteworthy to state that the increased recorded by the life sector is lower than the Further, the Insurance Industry Act was amended during previous year. the year 2011, to be made it obligatory for the composite insurance companies to be segregated in to life and non- Insurance Industry Statistics life sections. 2011 2010
Industry Market Share-Non-Life Insurance Premium Income (Rs. Million) 80,202 68,440 Growth Rate in Total Premium 17.18% 18.16% Life Premium Income (Rs. Million) 35,129 31,145 Growth Rate in Total Premium 12.79% 28.88% Non-Life Premium Income (Rs. Million) 45,073 37,295 Growth Rate in Total Premium 20.86% 10.49% Sri Lanka Insurance Ceylinco Insurance Janashakthi Insurance Union Assurance Aviva NDB Insurance People’s Insurance The regulatory framework of the insurance sector was HNB Assurance Other Players further strengthened with the enactment of amendments to the Regulation of Insurance Industry (RII) Act in January 2011. The main features include empowering the Insurance Board of Sri Lanka to stipulate capital requirements for insurance companies and brokers, stipulation of fitness and propriety criteria for the board of directors of insurance companies, bringing the National Insurance Trust Fund under the purview of the insurance regulator and appointment of institutional agents.
Ceylinco Insurance PLC 36 Annual Report 2011 There is no significant change in product composition Market Share-Life Insurance during the year compared to the previous year. Miscellaneous class tops the premium income with Rs.1,888 million and followed by the Fire premium income of Rs.1,144 million in 2011.
Premium Income Composition Year 2011
Ceylinco Insurance Aviva NDB Insurance Sri Lanka Insurance Union Assurance Janashakthi Insurance Asian Allaince Insurance HNB Assurance Other Players
Financial Performance
Gross Written Premium (GWP) Fire Motor Marine Misc The Company achieved an overall GWP of Rs. 19,857 Engineering Employers’ Liability million during 2011 as against the Rs. 18,011 million recorded in the previous year achieving an encouraging growth of 10%. Financial Review The company has ceded Rs. 1,835 million premium to Non-Life Division reinsurers during the year 2011 which is a 10% increase The Gross Written Premium of the Non-Life division compared to the previous year. This increase has resulted was Rs. 10,041 million in 2011. It recorded a 9% growth a slight drop in NRP mainly due to the substantial over the year 2010. Increased positivism in the business increase in contributions to the National Insurance Trust environment prevailed during the year together with Fund. This has restricted the NRP growth to 9% of the effective marketing strategies pursued, helped the company in 2011. company to achieve a positive growth in 2011. The Net Combine ratio marginally increased to 101.84% in 2011 from 101.38% in 2010. This was mainly due to Premium Income - Non Life the increase in Net Expense ratio which was increased Rs. Mn. 12,000 by 7% compared to the previous year.
10,000 The company has incurred Rs.4,476 million as Net 8,000 Claims compared to the Rs. 4,340 million in 2010. The 6,000 Net profit of the Non-Life division was Rs. 575 million, a 4,000 68% increase over the previous year.
2,000 The total assets of the Non-Life division increased by 0 8% in 2011 compared to 2010. The key contributor for 2010 2011 2007 2009 2008 the increase was the investments made during the year. Premium Composition The total investments of the Non-Life division were Rs. 6,981 million as at 31st December 2011. Motor product (VIP) premium income of Rs. 6,031 million represented 60% of the total Non-Life premium income. The balance Non-motor premium income was Rs. 4,010 million and it corresponds to 40% of total Non-Life premium.
Ceylinco Insurance PLC 37 Annual Report 2011 Management Discussion & Analysis
Solvency and Technical Reserves Financial Review Non-Life division was able to maintain a healthy In 2011 Rs. 696 million transferred from life solvency margin over the stipulated level by Insurance policyholder’s fund to the shareholder’s fund Board of Sri Lanka. 2011 The total assets of the Life division grew by Rs. 11,291 Rs. Million million and it represents a growth of 30% over the previous year. Investment income and other income of Available Solvency Margin 1,828 the life division improved to Rs. 3,882 million from Rs. Required Solvency Margin 1,641 3,454 million in 2010. Solvency Ratio (Times) 1.11 Total Net Claims and Benefits paid by life division for Life Division the year 2011 was Rs. 2,946 million with compared to Rs. 2,685 million for in the year 2010, showed a 10% Gross Written Premium of the life division increased by increase over the previous year. 12% to Rs. 9,816 million. The Life division sold 143,259 new policies during the year 2011. The growth was a result of confidence level placed by the customers on Solvency Margin- Life Division the company and the hard work on overcoming all the Life division was able to maintain a healthy solvency challenges faced by the Life division. margin over the stipulated level by Insurance Board of Sri Lanka.
Premium Income- Life 2011 Rs. Mn. Rs. Million 10,000 Available Solvency Margin 10,280 8,000 Required Solvency Margin 1,256
6,000 Solvency Ratio (Times) 8.19
4,000
2,000 Share Information 0 2011 was another great year. During this year recorded 2010 2011 2007 2009 2008 highest share price for both Voting and Non-Voting in the history of Ceylinco Insurance PLC. Investors’ Life Fund achieved an impressive growth of 20% confidence on the Company and better management compared to the previous year showing Rs. 38,203 performance underpined the ever highest trading price million at the end of year 2011. of the Company.
Long Term Insurance Funds Share Price Movements Year 2011 Rs. Mn. 40,000 Rs. 1,000 35,000 900 30,000 800 25,000 700 20,000 600 500 15,000 400 10,000 300 5,000 200 100 0 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2010 2011 2007 2009 2008 Voting-High (Rs) Non-Voting-High (Rs)
Ceylinco Insurance PLC 38 Annual Report 2011 Year ended Year ended 31.12.2011 31.12.2010 Net Assets Book value Per Share Rs. 357.76 287.99 Earnings Dividends per share
Earnings per share Rs. 42.76 30.41 Rs. Price Earnings Ratio (times) - Voting 17.46 12.53 8 Price Earnings Ratio (times) - Non Voting 8.02 8.88 7 6 Dividends 5 Interim & Final Dividend Rs. 6.50 5.50 4 Bonus Issue Nil Nil 3 Rights Issue Nil Nil 2 Share Price - Voting 1 High Rs. 950 680 0 2010 2011
Low Rs. 380 200 2007 2009 2008 Last transaction Rs. 746.7 381 Share Price - Non-Voting High Rs. 369.9 475 Low Rs. 257.2 132 Last transaction Rs. 343 270 Net Assets Per Share
Share trading - Voting Rs. No.of transactions 1982 2107 400 No. of Shares traded 6,188,200 6,009,300 350 Value of shares traded Rs. Mn. 3921.88 1863 300 250 Share trading - Non - Voting 200 No.of transactions 1,774 1,632 150 No.of Shares traded 1,930,100 2,702,100 100 Value of shares traded Rs. Mn. 614.95 473 50 Days traded - Voting 0 2010 2011 2007 2009 No. of days traded 154 193 2008 Total no.of market days 239 238 % of Market days traded 64.44 81 Days traded - Non - Voting No.of days traded 193 199 Total no.of market days 239 238 % of Market days traded 80.75% 84% Earnings Per Share Rs. Market capitalisation - Voting 60 Value (Rs.Millions) 14,934 7,620 50 % of market 0.67% 0.34% 40 Market capitalisation - Non- Voting 30 Value (Rs.Million) 2,200.17 1,732 % of market 0.10% 0.08% 20 10 Price movements CSE All Share Price Index 6,074.42 6,635.87 0 CSE Milanka Price Index 5,229.16 7,061.46 2010 2011 2007 2009 2008 Ceylinco Insurance Share price - Voting Rs. 746.7 381 Ceylinco Insurance Share price - Non- Voting Rs. 343 270
Ceylinco Insurance PLC 39 Annual Report 2011
Sustainability Report ”The importance of Sustainability has been realized and its application has been deeply embedded in the corporate culture of Ceylinco Insurance for many years...” Sustainability Report
Introduction of data so that key executives could make fast and The importance of Sustainability has been realized accurate decisions which will improve sustainability. and its application has been deeply embedded in the s 4O REWARD EMPLOYEES WHOSE IDEAS RESULT IN PRODUCT corporate culture of Ceylinco Insurance for many years. innovation, cost saving, better management or the However, in presenting the Sustainability Report in past enhancement of customer satisfaction, all of which years we did not adopt any internationally accepted will improve sustainability. guidelines. This year we are pleased to state that we s 4O ACTIVELY ENGAGE IN SOCIAL PROJECTS WHICH WILL adopted the Global Reporting Initiative (GRI) Version improve the quality of life of communities which 3.1 Guidelines. But it needs to be explained that many have been overlooked or inadequately cared for thus requirements regarding corporate information required contributing to their sustainability. by the GRI Guidelines are found under different sections elsewhere in this Annual Report. Therefore rather than s 4O PARTICIPATE IN INDUSTRY RELATED PROGRAMMES SUCH reproducing all such details we have wherever necessary, as seminars and workshops by which the public given specific references where such information can be perception of the industry will improve and the found. industry itself focus on sustainability issues.
GRI Application Level In keeping with the requirements of the GRI Application Level ‘C’ we have furnished the required Profile Checking C C + B B + A A + Disclosures and Performance Indicators. The GRI Options Guidelines require that descriptions be given for a Self Declaration 9 minimum of 10 Performance Indicators selected from Third Party Economic , Environmental and Social. However we have Checked given 21 Indicators. GRI Checked GRI Content Index
Our Sustainability Strategies Item Pages Through a process of interaction with our stakeholders Strategy and Analysis : GRI 1.1 43 to evaluate the economic, social and environmental Organisational Profile: GRI 2.1 to GRI 2.10 43-44 impacts caused by the day to day activities of the Report Parameters: GRI 3.1 to GRI 3.12 48-50 organization and by this process - (Excluding GRIs 3.9 & 3.10 which are not s 4O INTRODUCE INNOVATIVE VALUE ADDED PRODUCTS WHICH applicable) will offer customer satisfaction of the highest levels. Governance, Commitments and Engagement: 50-51 By this our customer base will continuously expand GRI 4.1 to GRI 4.15 (Excluding GRIs 4.5 to and our profitability will increase at a sustainable 4.13 which are not applicable) pace. Economic Performance Indicators: EC 1, 51 s 4O IMPROVE MANAGEMENT SYSTEMS NOT ONLY IN EC 3, EC 8 order to achieve higher standards of efficiency Environmental Performance Indicators: 52-53 and effectiveness but also to increase conservation EN 2, EN 4, EN 5, EN 18 and environmental care which will contribute to Labour Practices and Decent Work 53-55 sustainability . Performance Indicators: LA 1, LA 3, LA 10, s 4O MOTIVATE AND DEVELOP EMPLOYEES SO THAT THEY LA 12, LA 15 can fulfill their professional aspirations, achieve job Society Performance Indicators: SO 2, SO 4, 55-56 satisfaction and at the same time contribute to the SO 5, SO 6, SO 7, SO 8 sustainable growth of the company. Product Responsibility Performance 56-59 s 4O INTRODUCE STATE OF THE ART )4 SYSTEMS WHICH Indicators: PR 5, PR 6, PR 7 will enable the fast collection, transfer, and analysis
Ceylinco Insurance PLC 42 Annual Report 2011 1. STRATEGY AND ANALYSIS to be a model ‘green’ building in which the building design and the processes installed, significant levels of GRI 1.1 conservation of electricity and water have been achieved Statement from the most senior decision maker of the and the emission of Carbon Dioxide reduced. Details organization about the relevance of Sustainability to the of this project are to be found elsewhere in this report. organization and its strategy. In all our dealings with our stakeholders we have and will continue to uphold the principles of Sustainability Presented below are the statements by the Managing as described in the Global Reporting Initiative (GRI) Director/CEO of the General Division and the Managing document.” Director/CEO of the Life Division.
2. ORGANISATIONAL PROFILE A.R. Gunawardena Managing Director/CEO (General) GRI 2.1 “As our country moves on to the fast track in economic Name of Organisation development with mega infrastructure projects coupled with realistic fiscal consolidation and prudent debt Ceylinco Insurance PLC management, there arises the need for companies like GRI 2.2 ours to meet the challenge of Sustainability. While new vistas of knowledge and technology keep rapidly Primary brands, products and /or services opening and as we use these to further the growth of our The Sustainability of our company depends on the company we have to be mindful of how our services and loyalty of our customers. Customer loyalty depends on activities impact on planet earth, the natural resources the satisfaction they get by experiencing our products. of our country and the quality of life of our people. We Therefore ‘product innovation’ has been our theme as therefore have to involve all our stakeholders to monitor we regularly launch new products and add extra value how our day to day activities as a business organization to existing products. But all our products are services contributes towards or detracts from Sustainability. therefore the ‘experience’ is the service excellence we offer. In particular the speed at which we settle claims. This requires a great deal of Transparency in the presentation of our annual performance. I am therefore It is worth recalling that Ceylinco Insurance is the only pleased to inform our shareholders that this year we composite insurance company - not only in Sri Lanka have followed the Global Reporting Initiative (GRI) but also in Asia to have won twice over the award for Guidelines in presenting our Sustainability Report. ‘Innovation of the Year’ at the Asian Insurance Industry Awards. These awards are decided at what is in every In weaving the dreams of our nation we are also aspect a truly international competition. Over thousand declaring our commitment to Sustainability.” companies participate amongst them are the leading insurance and re-insurance companies of USA and R. Renganathan Managing Director/CEO (Life) Europe which have offices and operate in Asia. “We fully subscribe to and support the concept of VIP On-the–Spot: This was one of the products to win Sustainability. Progress and development become the ‘Innovation of the Year’ award referred to earlier. As meaningless unless it is in keeping with the goal of its name implies it means settling the motor insurance sustainability which is to ‘meet the needs of the present claim on the spot, in other words at the site of the without compromising the ability of future generations accident itself. It continues to dominate the motor to meet their own needs.’ The ever increasing threats insurance market and is the bench mark for all motor to the environment such as global warming is a clear insurance products in the industry. Adding value to On example of wrongly directed development which does the Spot claim settlement are two unique benefits for not heed the repercussions of the future. leased vehicles.
In this regard I am very pleased to state that our new (a) A payment of up to Rs.1 million to the vehicle leasing branch office in Kurunegala has been constructed company and Rs.500,000 to the family in the event of
Ceylinco Insurance PLC 43 Annual Report 2011 Sustainability Report
death or total permanent disablement of the vehicle Easy Payment of Premium through HSBC Credit owner due to an accident. Card. To enable the payment of Motor and Non-Motor premiums through an interest-free installment plan, (b) A payment of up to Rs.500,000 to the vehicle leasing we entered into an agreement with HSBC, whereby an company and Rs.500,000 to the family in the event of death or total permanent disablement of the vehicle HSBC Gold Card or Platinum Card was issued without a owner due to natural causes. With the increased joining fee, to our customers. Thereby the customer had vehicle imports during the year under review and to settle HSBC the agreed monthly installment while our with 90% of purchases on lease arrangements VIP company received the full premium up front. On-the Spot became the most preferred motor The Life Division too has launched innovative products insurance policy in the market. which has attracted customers who might otherwise Claim Settlement through ‘M Commerce.’ This was never have taken a Life Policy eg Ceylinco Retirement another innovation which was increasingly used during Plan and Life Pranama .There has also been innovation the year under review. The objective was to speed by way of house - to - house visits to pay annual up claim settlement at the customer’s convenience. bonuses which is described in PR 5 Therefore the customer was given the facility of getting his claim transferred to an exclusive bank account and Refer Section ‘Our Key Brands’ page 84 which describes being kept informed instantly through an SMS that such the branding strategies.. a deposit has been made. More importantly the customer could withdraw this claim money at any time from any GRI 2.3 ATM anywhere in the country. An ATM Card was issued Operational structure of the organization including main to customers free of charge. divisions, operating companies, subsidiaries and joint ventures. Warranty Insurance – General introduced yet another breakthrough in motor insurance with the innovative Refer Diagram A: Main Divisional Structure concept of Warranty Insurance for the motoring public Refer Diagram B: Subsidiaries. of Sri Lanka. The advantage in Warranty Insurance Refer Diagram C: Operational Authority/Responsibility is that it pays for the mechanical defects of the parts Flow Chart in re-conditioned vehicles that are covered under the insurance, during the first year from the date of purchase. Brand new vehicles will be given an extended warranty of up to two years on top of the warranty given by the manufacturer. This scheme is hailed as an industry first that enhances and adds value to the concept of insuring a vehicle.
Diagram A Ceylinco Insurance PLC
General Division Life Division
Managing Director/CEO Managing Director/CEO
Executive Directors Executive Directors
Insurance Operations s Subsidiaries Insurance Operations s Subsidiaries s !SSOCIATE #OMPANIES s !SSOCIATE #OMPANIES s 3TRATEGIC !LLIANCES
Head Office City Office Branches City Office Branches
Ceylinco Insurance PLC 44 Annual Report 2011 Diagram B
Subsidiaries / Associate Companies / Strategic Alliance Agreements
Subsidiaries Ceylinco Insurance (Pvt) Ltd (Maldives) Ceyhydro Developers (Pvt) Ltd Ceypower Cascades (Pvt) Ltd Energy Generators (Pvt) Ltd Ceylinco Investcorp (Pvt) Ltd CEG Education Holdings (Pvt) Ltd
Associate Companies General Division Ceylinco Homes International (Pvt)Ltd
Strategic Alliance Agreements in:
Nepal Dubai Bahrain Oman Kuwait Ceylinco Insurance PLC Qatar
Subsidiaries Serene Resorts Ltd Ceylinco Seraka Ltd Healthcare Services Ltd
Life Division
Associate Companies CDB (Citizens Development Business Finance PLC)
Ceylinco Insurance PLC 45 Annual Report 2011 Sustainability Report
Diagram C
Operational Authority/ Responsibility Flow Chart
CUSTOMERS – CORPORATE & INDIVIDUAL
MARKETING EXECUTIVES / CONSULTANTS
UNDERWRITERS & OTHER TECHNICAL, FINANCE AND ADMINISTRATIVE STAFF
BRANCH MANAGERS
REGIONAL/AREA SALES MANAGERS & FINANCE,TECHNICAL MANAGERS
REGIONAL MANAGERS/ DEPT. HEADS Flow of Authority Flow of CORPORATE Responsibility MANAGEMENT
MANAGING DIRECTOR / CEOs
BOARD OF DIRECTORS
SHAREHOLDERS
Ceylinco Insurance PLC 46 Annual Report 2011 GRI 2.4 Location of Branches: Refer Section ‘Our Branch Location of the organisation’s headquarters Network’: pages 72-75. General Division: 69, Janadhipathi Mawatha, Colombo 01. Sectors Served by General Division: Life Division: 106, Havelock Road, Colombo 05
Corporates SMEs Partnerships Proprietorships GRI 2.5 Banks Leasing Companies Finance Companies Number of countries where the organization operates Factories Hospitals Hotels Schools Refer Diagram B ‘Subsidiaries’ on page 45. Exporters Importers Wholesalers Retailers GRI 2.6 BOI Projects Other Projects Nature of ownership and Legal Form NGOs Individuals A quoted public company with limited liability, incorporated in Sri Lanka in 1987. Licensed as a Sectors Served by Life Division: company authorized to carry on insurance business, Individuals ranging from High Net-worth to Middle and under the Control of Insurance Act No. 25 of 1962 as Low Income. These sectors are serviced either through amended by Act No. 42 of 1986 (Presently replaced by Group Policies or through Individual Policies. Regulation of Insurance Industry Act No. 43 of 2000) Income Levels Group Policies Individual GRI 2.7 Policies Markets served (including geographic break down, High 99 sectors served and types of customers/beneficiaries) Middle 99 Low 99 Serving markets at the closest point of contact Insurance impacts on people at a time when they face financial loss and are emotionally at a low ebb. GRI 2.8 Death, disaster, illness, accidents, loss are the most Scale of the reporting organisation unpredictable of situations. Yet in these situations the only thing predictable is that through proper insurance Employees policies the resulting financial losses can be mitigated thereby helping to regain financial stability and Division No of Permanent emotional equilibrium. At times such as these speed Employees of accessibility and speed of service are of paramount General 2,074 importance. It is for this reason that Ceylinco Insurance Life 993 has established the most extensive branch network Total 3,067 backed by the largest support staff. By the end of 2011 the number of active branches were as follows.
Division No. of Distribution Total Branches Counters General 194 84 278 Life 181 - 181 Total 375 84 459
Ceylinco Insurance PLC 47 Annual Report 2011 Sustainability Report
Financial Highlights 2011 2010 % Increase Rs’000 Rs’000 s 4OTAL 'ROSS 7RITTEN 0REMIUM Gross Written Premium (General): 10,041,212 9,224,608 9 Gross Written Premium (Life): 9,815,943 8,786,121 12 s .ET #LAIMS"ENElTS s )NCREASE IN ,IFE )NSURANCE &UND s )NVESTMENTS AND OTHER INCOME s 0ROlT "EFORE 4AXATION s )NVESTMENTS s 4OTAL !SSETS s -ARKET #APITALISATION n 6OTING 3HARES Value (Rs.M) 14,934 7,620 95.98 % of Market 0.67 0.34 s -ARKET #APITALISATION n .ON 6OTING 3HARES Value (Rs.M) 2,200 1,732 27.02 % of Market 0.10 0.08 s (IGHEST 0RICE PER 6OTING 3HARE 2S s (IGHEST 0RICE PER .ON 6OTING 3HARE 2S s 0ROPOSED $IVIDEND PER SHARE 2S s 3OLVENCY 2ATIO !DMISSABLE !SSETS OVER ,IABILITIES 'ENERAL $IVISION TIMES s 3OLVENCY 2ATIO !DMISSABLE !SSETS OVER ,IABILITIES ,IFE $IVISION TIMES
GRI 2.9 GRI 3.3 Significant changes during reporting period regarding Reporting cycle size structure, or ownership Annual Refer Section ‘Report of the Directors’: pages 126-129. GRI 3.4 GRI 2.10 Contact point for questions regarding the report or its Awards received in reporting period contents. Refer Section ‘Awards Won’ pages 62-63. Company Secretary: e mail:[email protected]
3. REPORT PARAMETERS GRI 3.5 GRI 3.1 Process for defining report content. Reporting period Calendar Year. This coincides with Annual Report We have considered the following three factors in Financial Year. Note: The Sustainability Report forms defining the content of this report – part of the Annual Report (A) Materiality: By definition insurance is the transfer of RISK from one GRI 3.2 party (the insured/customer) to another (the insurer/ Date of the previous report. organisation). The risk being quantified by the financial loss the insured/ customer is estimated to incur if and This is the first Sustainability Report which conforms to when the risk materializes. Therefore the GRI Guidelines.
Ceylinco Insurance PLC 48 Annual Report 2011 Economic and Social impact on insured/ customer s 3RI ,ANKA !CCOUNTING 3TANDARDS 3,!3 s #OMPANIES !CT .O OF s 2EGULATION OF )NSURANCE )NDUSTRY !CT .O OF is measured by s 3TATEMENT OF 2ECOMMENDED 0RACTICE FOR )NSURANCE Contracts (SORP), adopted by the Institute of Chartered Accountants of Sri Lanka (ICASL). Gross Written Premium for year under review and s 3RI ,ANKA !CCOUNTING AND !UDITING 3TANDARDS Claims/Benefits paid during year Monitoring Board (SLAASMB)
(B) Prioritizing topics within the Report: These factors ensure that there is a high level of Since this Sustainability Report forms part of the transparency maintained throughout the Sustainability Annual Report the process of prioritizing the topics to Report. be included is determined by the requirements of the Annual Report. This in turn is has to be in accordance with-
(C) Identifying stakeholders the organization expects to use the report. STAKE-HOLDER REASONS THEY WILL REFER TO THIS REPORT
Shareholders They have invested their wealth in this company. In return it is our responsibility to safeguard and add value to this wealth. Therefore they have a right to know about the company’s Good Governance and financial performance. Customers It is because of the loyalty and trust our customers have in this company that they buy our products. It is our responsibility to offer unparalleled service excellence and settle claims without delay and in full. For this we have to maintain financial stability and Good Governance. This report clearly provides insights into these two aspects. Employees They are the company’s most valuable asset. It is through their loyalty, efficiency and effectiveness that the company can offer service excellence to our customers. Therefore our employees have a right to know about the performance of the company and the practice of Good Governance. Reinsurers Our reinsurance companies and reinsurance brokers are our vital business partners. It is through reinsurance that the company safeguards its customers by ensuring prompt payment of claims irrespective of how high is the amount. This Report will give a clear indication of our financial stability and Good Governance. Business Community We are part of the Business Community and there are many common objectives to achieve and common challenges to meet. Our financial performance will strengthen the synergy which can accelerate the economic growth of the country.
Ceylinco Insurance PLC 49 Annual Report 2011 Sustainability Report
STAKE-HOLDER REASONS THEY WILL REFER TO THIS REPORT
Central Bank of Sri Lanka. As regulatory authorities it is their responsibility to ascertain whether all regulatory information and disclosures have been made Insurance Board of Sri Lanka. and whether the principles of Good Governance and Transparency Securities & Exchange Commission of Sri have been adhered to. Lanka.
Sri Lanka Accounting & Auditing Standards Monitoring Board. Civil Society There is a debt we owe to the community in which we live and work. Committed as we are in ‘Weaving the Dreams of the Nation’ contributing to the socio-economic development of selected groups within Civil Society is our sincere commitment.
GRI 3.6 4. GOVERNANCE, COMMITMENTS AND Boundary of the report ENGAGEMENTS
GRI 4.1 GRI 3.7 Governance Structure of the organization, including State any specific limitations on the scope or boundary committees under the highest governance body of the report responsible for specific tasks, such as setting strategy or organizational oversight. For both of the above Refer 3.5 A and B Refer to Section ‘Corporate Governance’: pages 94-98
GRI 3.8 GRI 4.2 Basis for reporting on Joint Ventures, Subsidiaries, leased Indicate whether Chair of the highest governing body facilities etc. which can significantly affect comparability is also an executive officer and the reason for this from period to period arrangement
Refer 3.5 A and B PLUS Balance Sheet on pages 135 and The Chair of the highest governing body which is the Financial Information thereafter Board of Directors, is not an executive officer.
GRI 3.9 / 3.10: Are Not relevant to this Report GRI 4.3 Composition of Board according to gender and executive GRI 3.11 non executive members Significant changes from previous reporting periods in the scope, boundary or measurement methods applied in Board of Directors this report Executive Non Total Gender Executive No such significant changes in scope, boundary or measurement methods. 12 04 16 M
Total Number of Directors is 16 which is the maximum GRI 3.12 permitted by the Articles of Association of the organization. Table for identifying the location of the Standard For names of Directors and qualifications refer Section Disclosures in the report ‘Board of Directors’ on pages 86 - 93 NOTE: The definition of ‘Independent Director’ is identical to that This table is found at the very beginning of this contained in the GRI Sustainability Reporting Guidelines Sustainability Report where it is more relevant. Glossary.
Ceylinco Insurance PLC 50 Annual Report 2011 GRI 4.4 Informal Mechanism for shareholders and employees to provide Branch Visits by Executive Directors and General recommendations or direction to the highest governance Manager (Branches) during which one-to-one body discussions are held with staff members.
Shareholders GRI 4.5 to 4.13 Mechanisms for shareholders to provide Not Relevant for this Application Level recommendations or directions to the highest governance body which is the Board of Directors, are GRI 4.14 very clearly provided in the Articles of Association of the Company. List of Stakeholder Groups engaged by the organisation
Reference – GRI 4.15 Section ‘General Meetings’ Articles 54 – 63 Basis for identification and selection of Stakeholders Section ‘ Proceedings at General Meetings’ Articles 64 – 74 with whom to engage. Section ‘Votes of Members’ Articles 75 – 84 Item C given under GRI 3.5 on page deals with the above Employees two issues.
Mechanism for employees to provide recommendations or directions to the Board of Directors consist of both ECONOMIC PERFORMANCE INDICATORS formal and informal channels. GRI EC 1 Direct Economic value generated and distributed, Formal Channels – including revenues, operating costs, employee Bi-monthly Discussion Meetings. compensation, donations and other community Chaired by: Managing Director/CEO investments, retained earnings, payments to capital Assisted by: Executive Directors Participants: Corporate providers and governments Management Matters Discussed: A comprehensive description and disclosure meeting the Review of Performance – Premiums and Profitability/ requirements of the above are provided in the Section – Reasons for Deviations from Targets/Status of ‘Financial Statements’ pages 135 - 203. outstanding Claims/Pending court cases regarding third party claims/Future Plans/Competitors’ Activity/ GRI EC 3 Recommendations to improve Market Performance – Including : Opening of new branches, Launching New Coverage of the organisation’s defined benefit plan Products/CSR Projects obligations
Monthly Regional Meetings Chaired By: Regional Refer Section – Notes to the Financial Statements under Manager Participants: Branch Managers Matters ‘Employee Benefits’ on page 161 The Employees’ Benefit Discussed: Same as above but with relevance to the Manual which is issued to every employee on being Region. made permanent also contains a complete description of Benefits offered. Weekly Branch Meetings Chaired By: Branch Manager Participants: Branch Staff Matters Discussed: Same as GRI EC 8 above but with relevance to the Branch. Development and impact of infrastructure investments and services provided primarily for public benefit Weekly Departmental Meetings Chaired By: Head of through commercial, in-kind or pro-bono engagement Department Participants: Department Staff Matters Discussed: Same as above but with relevance to the Refer Section ‘Corporate Social Responsibility’: pages 60 - 61 Department.
Ceylinco Insurance PLC 51 Annual Report 2011 Sustainability Report
ENVIRONMENT PERFORMANCE INDICATORS Net Metering Agreement with Ceylon Electricity Board: By this means it is possible for the Branch to re-sell to GRI EN 2 the Ceylon Electricity Board surplus electricity generated by the solar panels and unutilized during week-ends and Percentage of materials used that are recycled input holidays. materials
Specially designed windows: In yet another successful Item: Paper attempt to conserve energy the windows have been so designed as to prevent excessive sunlight entering the 60% of paper used for Internal Reports, Memos and building. By this internal temperature is kept low thereby Instructions which for purpose of effectiveness are not reducing the need for air-conditioning. At the same sent via computer are recycled paper. This is paper on time there is sufficient natural sunlight entering which which one side contains ‘Non Classified‘ information. minimizes the use of electric bulbs. The blank side is used for the above mentioned purpose.
Low energy lighting fixtures :Low energy lighting 90% of large envelopes used for Internal Distribution of fixtures such as LED,T5 and CFL are used throughout documents are recycled envelopes. the entire office. We also ensure that the material described below are This building is the very first in the entire province to sent for recycling and thus become useable. install Solar Power and Ceylinco Insurance (Life) is the 100% of one month old Newspapers which are not first Insurance Company to enter into an agreement with required for Reference are dispatched to special the Ceylon Electricity Board for net- metering collection outlets which send them to a Recycling Centre.
Item: Plastic bottles, plastic ball point pens
100% All such items disposed by staff are collected and dispatched to special collection outlets which send them to a Recycling Centre
GRI EN 4 Indirect energy consumption by primary source
In a landmark example of planned energy conservation the Life Division made their newly constructed 4 floor, 10,275 sq.ft. branch office in Kurunegala into a model ‘green‘ building.
Solar Power Panels: With this installation the peak capacity of solar power is 3.22 Kw and the projected energy delivery is 370 Kw providing an annual saving on electricity costs of Rs. 107,000/-
Inverter Technology: The lift in the building are all fitted with Inverter Technology thereby saving on electricity consumption.
Ceylinco Insurance PLC 52 Annual Report 2011 GRI EN 5 Employment by Energy saved due to conservation Main Categories
Solar PV Peak Projected Peak Projected Capacity/day Delivery/month Annual Savings (Rs.) 3.22 Kw 370 KwH 107,000
GRI EN 18 Initiatives to reduce greenhouse gas emissions and reductions achieved Sales Underwriting Technical Accounts As a result of the initiatives described in EN 5 above the IT Others greenhouse gas emissions have been reduced as follows:
Type of greenhouse gas Quantity of Reduction Carbon Dioxide 3.5 tons /annually GRI LA 3 LABOUR PRACTICES AND DECENT WORK Benefits provided to full time employees that are not PERFORMANCE INDICATORS (Employment) provided to temporary or part time employees
GRI LA 1 A wide and varied scheme of benefits are available to all permanent employees. A full description is found in the Total workforce by employment type, employment ‘Employees’ Benefit Manual’which is issued to every contract and gender employee on being made permanent. These benefits include: Permanent Employees General Life s &INANCIAL BENElTS RANGING FROM (OUSING ,OANS AND Male 1,757 837 Distress Loans to Festival Advances to a contributory Female 317 156 Pension Fund and rewards for Outstanding Total 2,074 993 Performance in the academic field and job excellence. s (EALTH )NSURANCE FOR EMPLOYEES AND THEIR Contract Employees dependents. General Life s #ONCESSIONARY %ASY TO 0AY PREMIUMS FOR (OME Male 468 28 Insurance and Health Insurance for elderly parents. Female 46 13 s ,EAVE FACILITIES Total 514 41 s 'RATUITY 0AYMENTS
s %MPLOYEES 0ROVIDENT &UND
s %MPLOYEES 4RUST &UND
It must be emphasized that the above is only an outline of the main benefits. The complete set of benefits is given in the Employees’ Benefit Manual referred to above. It must also be emphasized that the Benefits offered very significantly exceed the stipulated Statutory Benefits.
Ceylinco Insurance PLC 53 Annual Report 2011 Sustainability Report
GRI LA 10 Two Day Residential Out- Bound Programme Average hours of training per year per employee by Category of Employee Number of gender and employee category Participants Technical (Automobile Engineers) 135 * Training is an on-going process. For both the General Managers 45 Division and the Life Division, training consists of On-the-Job training and workshops. As can be seen IT Staff 25 from the chart below the focus on training is the front Call Centre/ Nerve Centre 35 line employees namely the Marketing Executives of the General Division and Consultants of the Life Division * For safety reasons the maximum number taken for a though they are not permenent employees. They have programme is 45 the most intensive and most frequent training sessions. Many of these training sessions are held at regional level. Life Division’s Residential Training Centre: Located on In this regard it is relevant to point out that many branch a picturesque beach front a t Uswetakeiyawa is the Life offices have their own auditoriums with the required Division’s Training Centre consisting of three conference facilities where training workshops can be held. All staff Halls, forty two fully furnished bed rooms, a spacious categories undergo training. The resource personnel for dinning room, a recreation area, swimming pool and a training programmes are from within the company and well stocked library. There is no doubt that the ambiance from amongst the best of external resource personnel . of this Centre contributes significantly to the success of the training programmes. Employee Gender Hrs/ Type of Continuous Professional Development (CPD): Category Year Programme At Ceylinco Insurance professionalism is valued, Marketing F: 5% 72 Hrs Workshop: In - encouraged and rewarded. We believe that academic Executives M: 95% house resource qualifications go hand in hand with job experience. In (General) personnel fact each supplements the other. Therefore those who F: 45% plus external sit for and are successful at professional examinations Consultants M: 55% >72 resources relevant to their jobs are reimbursed the cost of the (Life) Hrs examination fees. Furthermore membership fees for Technical – F: 15% 24 Hrs Lecture/ professional institutes are also reimbursed. Underwriters M:85% Workshop: & Automobile In house plus Engineers external resource GRI LA 12 personnel Percentage of employees receiving regular performance Managers F:10% 18 Hrs Lecture: In and career development reviews by gender M:90% house/ external resource Employee Gender Frequency personnel Category of Review Secretaries and F: 35% 6 Hrs Workshop: Sales Executives F: 5% M: 95% Monthly other staff M 65% External resource All Other F:15% M: 85% Annually personnel categories
In addition to the above programmes a very popular All Employees are subject to Performance Appraisals/ and rewarding programme has been the Out-Bound Reviews which are held with a 5–Point objective. Leadership and Team Building programme. This s 4O IDENTIFY REASONS WHY TARGETS ARE NOT ACHIEVED includes rafting, jungle trekking , mountain climbing. Living under canvas with only the very basic of facilities. s 4O IDENTIFY THOSE PERSONS WHO NEED ADDITIONAL Our experience has clearly shown that this programme training. contributes in a very positive way to team building. s 4O IDENTIFY THOSE WHO DESERVE INCREMENTS AND promotions.
Ceylinco Insurance PLC 54 Annual Report 2011 s 4O IDENTIFY THOSE WHO NEED JOB ADJUSTMENTS IN ORDER GRI SO 5 to benefit both the individual and the company. Public policy positions and participation in public policy s 4O IDENTIFY REVISED CRITERIA FOR SETTING NEW TARGETS development and lobbying
Ceylinco Insurance has always been a very responsible GRI LA 15 member in the insurance industry and made significant Return to work and retention rates after parental contributions to enhance both the prestige and (maternal) leave credibility of the industry. One of the many areas in which Ceylinco Insurance can claim pre-eminence is in Maternity Leave Statistics the high professional caliber of its Directors and senior Division No.of mothers No. Returned managers. In addition to serving the company these granted leave after leave persons have devoted their time to serve in insurance General 09 09 related institutions. Life 01 01 1. Mr A.R. Gunawardena - Managing Director/CEO (General) Note: For the 1st and 2nd child the employee mother is granted 84 working days full pay leave. Member of the Technical Advisory Committee of the Government Strikes, Riots, Civil Commotion Society Performance Indicators (Corruption) & Terrorism Fund which is functioning under the National Insurance Trust Fund. (NITF) GRI SO 2 Percentage and total number of business units analysed 2. Mr W.C.J. Alwis –Director (Technical) / Chief for risks related to corruption Technical Officer
100% of all business units – this means the two Head (a) Alternate Member of the Technical Advisory Offices and each of the 380 branches of the General Committee of the Government Strikes, Riots, Civil Division and the Life Division are regularly checked Commotion & Terrorism Fund which is functioning for corrupt practices. This includes misappropriation of under the National Insurance Trust Fund. (NITF) funds, approval of fraudulent claims, renewing policies or underwriting new insurance policies which are irregular. (b) Member of the Executive Committee of the Representatives of the Internal Audit Department Insurance Association of Sri Lanka (IASL) monitor all transactions and submit monthly reports to the Audit Committee and the Executive Directors. In (c) Vice President of the Ceylon Society for Prevention addition the external auditors also do an annual audit of of Accidents (CeSPA) branches and departments. (d) Presented papers during the year under review at:
GRI SO 4 1. 7th Asian Conference on Health Care and Health Actions taken in response to incidents of corruption Insurance in Singapore jointly organized by Asia Review and Middle East Review. Proven cases or self confessed cases of misappropriation of the organisation’s funds result in the termination of 2. FAIR International Health Insurance Conference the employee’s services. In other instances of corruption 2011 in Kuala Lumpur, Malaysia organized by disciplinary action in accordance with the seriousness of Malaysian Insurance Institute and Federation of Afro the offence is taken. –Asian Insurers and Reinsurers (FAIR).
Ceylinco Insurance PLC 55 Annual Report 2011 Sustainability Report
3. Mr E.T.L. Ranasinghe – Director/Deputy Chief 11. Mr Anura Dayanath-Senior Manager Human Executive Officer (Life) Resources (Life)
Alternate Member of the Executive Committee of the (a) Member of the HR Sub-Committee of Insurance Insurance Association of Sri Lanka (IASL). Association of Sri Lanka
4. Mr D.W.P. Upali – Director/Chief Financial Officer (b) Member of Research & Research Publication (General) Committee of the Institute of Personal Management Member of the Financial Technical Sub-Committee (IPM) of Insurance Association of Sri Lanka (IASL) GRI SO 6 5. Mr P.A. Jayawardena – Director/Chief Financial Officer (Life) Total value of financial and in-kind contributions to political parties, politicians and related institutions by Alternate Member of the Financial Technical Sub- country. Committee of Insurance Association of Sri Lanka (IASL) No contributions have been made.
6. Mr P.D.M. Cooray- Director/Head of Human GRI SO 7 Resources &Training (Life) Total number of legal actions against the organization Addressed the Convention of the Life Underwriters for ant-competitive behavior, anti-trust and monopoly Guild of India (LUGI) held in Chennai, India. practices and their outcomes
7. Mr Bonnie Fernando – Director/Head of Not a single legal action has been taken against the Information Technology (General) Member of organization for any of the above. the Information Technology Sub-Committee of Insurance Association of Sri Lanka (IASL) GRI SO 8 8. Mr H.D.A.N. Perera - General Manager: Technical Monetary value of significant fines and total number of (General ) non-monetary sanctions for non-compliance with laws and regulations. (a) Member of the Working Committee of the None whatever. Government Strikes, Riots, Civil Commotion & Product Responsibility Performance Indicators Terrorism Fund which is functioning under the (Customer) National Insurance Trust Fund. (NITF)
(b) Member of the General Insurance Forum (GIF) of GRI PR 5 the Insurance Association of Sri Lanka (IASL). Practices related to customer satisfaction including results of surveys measuring customer satisfaction 9. Mr Asoka Sirisena-Assistant General Manager : Technical (Life) General Division: (a) Council Member of the Sri Lanka Insurance Institute For the General Division a quick response to (SLII) a customer’s call for help is a vital part of the organisation’s service excellence which results in (b) Member of Life Insurance Forum of the Insurance customer satisfaction of the highest level. This is Association of Sri Lanka (IASL). specially relevant for Motor Insurance in which the company created a revolution with the introduction of 10. Mr Sujeeva Kumarapperuma–Assistant General On–the–Spot Claim Settlement. Manager : Actuarial &Reinsurance (Life) Council Member of Actuarial Association of Since the date of the launch of this product the target Sri Lanka (AASL) time for an automobile engineer to visit the site of
Ceylinco Insurance PLC 56 Annual Report 2011 accident was 30 minutes. However during 2011 the target time was reduced to 20 minutes.
The Call Centre which operates 24/365 is the first to receive the customer’s intimation of an accident. In addition to passing the information to the relevant automobile engineer who has to go to the site of the accident, the Call Centre now follows up with the customer inquiring about the quality of service received.
Average No. Percentage of Percentage of Reasons for Remarks of accidents Satisfied Responses Dissatisfied Dissatisfaction reported / day Responses 350 96% 4% Having to report This is a legal requirement and has to accident to be done by the driver of the vehicle. Police It is something beyond the control of the company.
Branch Customer Surveys Each of the 194 branches of the General Division conducts monthly random surveys to ascertain customer satisfaction levels for Service Excellence regarding Claim Settlement. The average number of customers interviewed per Branch during 2011 was 360.
No. of Percentage of Percentage of Reasons for Remarks Customers Satisfied Responses Dissatisfied Dissatisfaction surveyed per Responses Branch for Year 360 98.5% 1.5% s $ELAY IN CLAIM Every valid claim is settled without settlement delay and in full.
s $ISAGREEMENT However when there is a doubt on amount paid the claim is investigated and when necessary part settlement is made.
Customer ‘Get-Togethers’ customer sub-group. A special insurance policy was Throughout the year each Branch organized ‘Get – developed for them and to create better awareness of this Togethers’ at which between 50 to 150 customers at a policy and create a close rapport with this group a series time were hosted for dinner at exclusive venues. The of events for the three –wheeler drivers and their families objective of these ‘Get –Togethers’ was not only to create was organized in major towns. The entire morning was a closer bonding but also to give an opportunity for our spent in fun-type family games with many prizes and customers to meet Directors and senior members of refreshments thrown in. Feed back after each event was Corporate Management and provide valuable feedback. very positive with loyalty levels and confidence in the The City Office too organized Cocktail Parties for the company increasing. High Net worth Customers of the various Departments. Rest Spots for Customers These occasions further increased customer satisfaction One of the unique innovations quite unconnected with with the company and strengthened the bonds of loyalty. insurance but certainly connected with customer cae has been the installation and maintenance of Rest Spots on Three Wheel Driver’s Family Events all the major highways for the exclusive use of customers Today the Three- Wheeler is the most popular mode of the General Division. These Rest Spots have 5-star of hired transport for the public. With the increasing hotel type washroom facilities, pure drinking water and number of Three Wheelers on the road in all parts of the a comfortable sitting area where customers and their country we have identified this group as an important friends and families can rest awhile before resuming
Ceylinco Insurance PLC 57 Annual Report 2011 Sustainability Report
their onward journey. These VIP Rest Spots are Type of Claim Number Value (Rs.M) situated on the trunk roads at Warakapola, Melsiripura, Death 1,228 315 Pussellawa, Kitulgala, Tangalle, Induruwa, Kuruwita. More will be put uo along the new highways leading to Medical 14,336 106 the North and East. TOTAL 15,564 421 Life Division : Our Customer Care Credo-A reflection of our attitude Life Division conducted a series of programmes with towards our customers similar objectives of increasing customer satisfaction levels and strengthening the bonds of loyalty. These s /UR #USTOMERS ARE THE MOST IMPORTANT PERSONS IN were- our business in person, by mail or by telephone.
Home Delivery of Annual Bonus Payments s /UR #USTOMERS ARE NOT DEPENDENT ON US 7E ARE No. of Customers Total Amount Paid dependent on them. 9,695 Rs.38,151,925 s /UR #USTOMERS ARE NOT AN INTERRUPTION TO OUR WORK They are the purpose of it. Family Savaris This was a series of very innovative programmes which s 7E ARE NOT DOING THEM A FAVOUR BY SERVING THEM became the talking point amongst customers and non- They are doing us a favour by giving us the customers alike. Briefly these were – opportunity to serve them. s POLICYHOLDERS AND THEIR FAMILIES IN DIVIDED s /UR CUSTOMERS ARE NOT OUTSIDERS TO OUR BUSINESS groups on a one day outing to Leisure World They are the purpose of it. s POLICYHOLDERS IN DIVIDED GROUPS ON AN EVENING s /UR CUSTOMERS ARE NOT COLD STATISTICS 4HEY ARE mESH sunset cruise aboard the Sri Lanka Navy’s cruise ship and blood humans like us with feelings and emotions ‘Jetline’ like our own. s HIGH NETWORTH POLICYHOLDERS AND THEIR FAMILIES s /UR CUSTOMERS ARE PEOPLE WHO BRING US THEIR WANTS on a day-out in Kandy travelling aboard Sri Lankan It is our duty to serve them in such a manner that Airlines air taxi. both we and they will want to have a long term relationship. s POLICYHOLDERS AND THEIR FAMILIES ON AN ALL EXPENSES paid 4 day holiday in Singapore. We believe that profit can only be earned through satisfied customers and that without satisfied customers For more details and photos Refer Section ‘The Year’s there can be no future for any organization. Events’ on pages 76-83. Refer to ‘What our Customers say’ on pages 30. Speedy Claim Settlement The objective is to settle every valid claim within 30 days GRI PR 6 of receiving one. During the year under review 95 % Programmes for adherence to laws, standards an of death claims received were settled. Thereby the Life voluntary codes concerning marketing communications, Division created customer satisfaction of the highest including advertising , promotion and sponsorships level and maintained its record of being the best in claim settlement in the Life Insurance Sector of the Industry. The organisation observes a voluntary code of ethics regarding marketing communications which is based on the Standards of Practice formulated by the American
Ceylinco Insurance PLC 58 Annual Report 2011 Association of Advertising Agencies (AAAA). The 5 Point Guideline is: s .O FALSE OR MISLEADING STATEMENT WILL BE INCLUDED s .O FALSE OR INACCURATE TESTIMONIALS WILL BE INCLUDED s .O MISLEADING STATEMENT WILL BE MADE REGARDING price ( Premium) s .O CLAIMS WILL BE MADE ABOUT PRODUCT BENElTS WHICH are false, exaggerated or unsubstantiated. s .O STATEMENT OR VISUAL WILL BE INCLUDED WHICH CAN BE deemed to be indecent or which can cause offence to any ethnic, gender, religious or age group.
The Marketing Communication operation is directed by a senior, qualified, marketing professional. This manager keeps all Branch managers aware of the above code and whenever regional marketing communications are at branch level checks all material prior to release.
In addition to this, all mass media marketing communications are monitored by the Insurance Board of Sri Lanka which also has formulated its regulations regarding marketing communications.
GRI PR 7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications including advertising, promotion and sponsorship by type and outcome
There has not been a single such incident.
Ceylinco Insurance PLC 59 Annual Report 2011 Corporate Social Responsibility
‘Pranama’ Scholarships to Future Leaders
Scholarships worth Rs 7.6 million were awarded to 142 specialists and opticians as well as free ECGs, blood future leaders of Sri Lanka at the 10th edition of Ceylinco pressure and blood sugar tests. The checks covered the Life’s ‘Pranama’ Scholarships programme in 2011. general condition of the persons examined and included oral and dental condition, vision, hearing, the cardio Since its inception the Life Division has disbursed a total vascular system, respiratory tract, abdomen, skin, joints of Rs 50 million worth of scholarships. and central nervous system. All participants underwent a structured examination and were provided with a The scholarship recipients, drawn from all parts of Sri medical report containing the doctor’s findings and Lanka included 24 students who excelled at the Year recommendations. 5 scholarship, 22 who excelled at the G.C.E. (O/L), 23 students placed 1st in their districts at the G.C.E. As in previous years the General Division conducted Advanced Level and 59 students placed 2nd,3rd and 4th its CSR activity through a series of de-centralised in their districts at this exam. programmes conducted by the branches. A significant contribution to community welfare was made through In addition, 10 national merit award recipients who numerous Temporary Refreshment Centres for Pilgrims. had excelled at the national level in sports, aesthetics, These were organised at places where prominent invention and creativity were rewarded under this Buddhist, Hindu, Muslim and Catholic festivals were initiative while each of the students who achieved the held and with the active co-ordination of the religious highest marks islandwide in mathematics, biology, dignitaries . Around the country there were about 35 commerce and arts at the G.C.E (A/L) examinations also such centres at different times of the year and several received special cash rewards. thousands of pilgrims benefitted. The General Division also continued with its ‘Touching Lives’ programme ‘Waidya Hamuwa’ offers Health Care to Thousands of identifying persons with specific disabilities and offering relief. One example was the Cerebral Palsy Ceylinco Life further strengthened its commitment to chair donated to Cammilus School at Mattegoda which its flagship community project ‘Waidya Hamuwa’ (Meet houses 50 differently- abled persons. Blood donation the Doctor), by conducting 28 free medical camps that campaigns were also benefited more than 7,300 people in 2011. held with the support of the National Blood Among the areas in which these camps were held were Transfusion Service. Sooriyawewa, Padaviya, Valachchena, Bandaragama, Dahiattakandiaya, Mahiyanganaya, Kalawanchikudi and Galengidunuwewa.
People who visited these medical camps had consultations with General Practitioners, checks by eye
Ceylinco Insurance PLC 60 Annual Report 2011 ‘Senehasaka Udanaya’ provides advice on Natal Care Over Rs 2 million was incurred on the construction of these classrooms, each of which is 400 square feet in extent.
Ten other classrooms are being constructed at present with the support of the Life Division, in addition to those completed in 2011.
With the classrooms completed in 2011, the number of classrooms donated to rural schools by the Life Division increased to 37.
Blood Donation Camps Ceylinco Life partnered the National Blood Transfusion Service and organised blood donation camps at 10 locations during 2011. More than 1,000 pints of blood Through a series of workshops held in different were collected at these camps. parts of the country under the ‘Senehasaka Udanaya’ programme, Ceylinco Life provided education on pre and post natal care to 1,800 pregnant mothers and their Ceylinco Life funds house for war-hero family members at 12 locations including Nikaweratiya, Hingurakgoda, Ingiriya, Rikillagaskada, Kamburupitiya and Badulla.
Doctors who conducted these workshops covered an array of important topics pertaining to nutrition for the mother and child, child care, hygiene, lifestyle and environment
Classrooms for Rural Schoolchildren
As the third-year commemoration of the end of the military conflict in Sri Lanka draws near, Ceylinco Life has paid tribute to the sacrifice made by a gallant war hero who was disabled during the war of liberation, by providing Rs 1 million for the construction of a house.
This new house was constructed in Hevanapalassa in Nikaweratiya for Pte R.D.C Sanadheera of the of the Gajaba regiment of Sri Lanka Army. In keeping with its commitment to improve the learning The contribution was made by Ceylinco Life to the ‘Seva environment of rural schools, Ceylinco Life constructed Vanitha Unit’ of the Ministry of Defence as part of its classrooms for the Muruththettuwa Junior School – CSR initiatives. Dehiovita in Avissawella; Thissapura Junior School at Ethimalewewa in Monaragala; Kasikote Junior School at Ambanpola in Galgamuwa and Koonwewa School at Mahapotana in Kahatagasdigiliya.
Ceylinco Insurance PLC 61 Annual Report 2011 Awards Won
Best in Asia for Corporate Social Responsibility They were K.L.U. Priyantha and H.M.J. Banda who won The Life Division once again received international Silver and Bronze awards respectively in the Territory recognition for its commitment to the community Manager category and S. Selvarayini won a Silver award when it received the overall award for ‘Best Corporate in the Executive category. Social Responsibility Practices’ at the second CMO Asia Awards for Excellence in Branding and Marketing Ceylinco Insurance selected as the People’s Choice which was held in Singapore. Mr H.A.Suraweera Senior for the fifth consecutive year Manager ( Events & Promotions) of the Life Division represented the company at this event.
Ceylinco Life was the only Sri Lankan company in the insurance sector to win an award at this prestigious event.Asia’s Best Brand Awards are judged by the Global Research Cell of the CMO (Chief Marketing Officer) Council based on market dominance, brand longevity, goodwill, customer loyalty and market acceptance.
This latest award was a strong affirmation of our flagship CSR initiative titled ‘A healthy nation,’ a multifaceted portfolio of health-related initiatives built around the ‘Waidya Hamuwa’ series of free medical camps conducted by teams of travelling doctors, the series of educational seminars for pregnant mothers titled Ceylinco Insurance, once again consolidated its position ‘Senehasaka Udanaya,’ the series of blood donation as the trail blazer in the Sri Lankan insurance industry, camps conducted country-wide with the National Blood winning the “People’s Insurance Brand of the Year” Transfusion Service (NBTS) and the educational and for the fifth consecutive year. The People’s Awards, awareness programmes conducted for communities at conducted by the Sri Lanka Institute of Marketing risk from Thalassaemia. (SLIM) in association with Nielsen Lanka (Pvt) Ltd, recognises and honours brands that have won the hearts of Sri Lankans.
Following an extensive research criteria, the winning brands have been selected over a period of five months stretching from September 2010 to January 2011. People aged 15 to 60 years are interviewed including those in the North and East for the first time ; the results reflect the opinions of people from all regions and communities.
Since its inception five years ago, The People’s Awards which is the only event to measure the pulse of the people of this country, have added value to brands as those preferred by the people. In being chosen for the NASCO Awards for Sales Team Members People’s Awards for the fifth year, Ceylinco Insurance has retained its prestigious position as the most preferred Three outstanding members of the Ceylinco Life sales Choice of the People of Sri Lanka. team were recognised at the National Sales Congress Awards (NASCO) 2011 conducted by the Sri Lanka Institute of Marketing (SLIM).
Ceylinco Insurance PLC 62 Annual Report 2011 Ceylinco Insurance Honoured With Gold Award At and procedures of the QC100 model of Total Quality World Quality Commitment Awards In Paris Management. Business Initiative Directions has In an affirmation of its outstanding quality offered to succeeded in becoming one of the first four world-wide customers, Ceylinco Insurance received the prestigious organisations to implement a Quality Culture in top World Quality Commitment Award in the Gold Category national, continental or global companies. at the World Quality Commitment Convention at the International Quality Awards 2011, which was held in Ceylinco Insurance bags top honours for the third Paris. Mr Senaka Rajapakse Senior AGM Marketing time at National Business Excellence Awards 2011 (General), represented the company at this event.
The World Quality Commitment Award recognises companies around the globe that are committed to quality, innovation and leadership in their respective spheres of industry. Awards were presented to companies committed to excellence, representing 49 countries. The gala event was attended by a distinguished gathering, along with outstanding personalities from the business world and diplomatic corps, representing North America, Africa, Asia, Oceania and the Middle East.
The criteria for selection, which follow the guidelines of the QC100 Total Quality Management model, are the companies that are categorised as quality driven organisations, practices a customer minded approach, Ceylinco Insurance once again bagged top honours encourages continuous improvements in systems, for the third time when it emerged the winner in ‘ The leaders in societal activities, and with best practices Insurance Sector’ at the National Business Excellence in Human Resources. The companies feted with this Awards 2011. Conducted by The National Chamber of award , symbolize a sound commitment to leadership, Commerce of Sri Lanka for the eighth consecutive year, technology and innovation, making them models for the National Business Excellence Awards are recognised others in their sectors. The quality symbol of Business as one of the most significant events that benchmark Initiative Directions is present in 178 countries around corporate performance and excellence. The winning the world, creating a firm ground for the implementation companies are selected for their noteworthy contribution of integral quality processes through the technology towards the socio economic development of Sri Lanka through the adoption of efficient methodologies and proper business ethics. Additionally, the winners are also chosen for displaying a high degree of sustainable market competitiveness parallel to advocating best practices with outstanding performance and leadership in their respective spheres of industry.
Ceylinco Insurance PLC 63 Annual Report 2011 Enterprise Risk Management General Insurance
“Firms need to figure out how to measure maintained to make use of opportunities while risk management and hold managers ensuring the organization’s financial assets and accountable for it. Just as they do with reputation is not at stake. revenue growth and productivity.” Infrastructure To Manage The Risks Of The Summit report 2008 – Company. (2009 Presidents and Fellows of Harvard College) ERM Committee The bitter experiences of the World Financial Crisis in The ERM committee comprises of directors and 2008 and the present status quo of the world Economy, functional heads. The ERM committee analize the demand enterprises to consider PESTEL factors of not organizational internal and external environment along only in their country of business operation , but in those with the organization’s currunt position. The comitee of their stakeholders including trade organizations , with this knowledge identify, measure and respond to bankers , suppliers and professional bodies. risk . Inputs for more specific and technical aspects are derived from some of the below mentioned sub Enterprise risk management (ERM) is the process committees and the functioning of the Marketing of planning, organizing, leading, and controlling the Communication and Customer Relation Process. activities of an organization in order to minimize the effects of risk on an organization’s capital and earnings. s 2ISK -ANAGEMENT #OMMITTEE Enterprise risk management expands the process to This committee looks at all risks involved with the include not just risks associated with accidental losses, General Insurance products of the company and but also financial, strategic, operational, and other risks. the re insurance policies followed.
Significance of ERM to Ceylinco Insurance (General) s Investment Committee We are in the business of facilitating the sharing of risks Investment committee reviews the risks due to faced by our customers, among a community of similar impact of macro economic factors on all company individuals and organizations. This effectively makes investments ,review the asset allocation of the us accept the risk of others and employ mechanisms General Insurance Fund and the performance of to reduce and eliminate such risks of others. While the investment portfolios. managing the risks of company’s financial and non financial wealth. s !UDIT #OMMITTEE Audit committee looks at the risk arising in Thus the ERM policies of an Insurance company have to operations, ensure effective internal audit meet both objectives of ; procedures and the reporting compliances. a) Managing Risks s -ARKETING #OMMUNICATION AND THE #USTOMER The risks have to be managed to ensure the safety Relation Process. of company wealth and also effective sharing of This process ensures that the Insurance solutions customer’s underwritten risks. The exposure to risk offered by the company are in line with the and the profitability of the company are correlated requirements of the market , communication is both positively and negatively depending on the accurate and the experience at the customer’s end occurrence and non occurrence of an incident. is what was promised. b) Seizing opportunities Acceptance of greater risks in the form of risks underwritten or kept open provide opportunities for higher profitability, while exposing the reserves and reputation of the organization and vice versa. Therefore the correct combinations have to be
Ceylinco Insurance PLC 64 Annual Report 2011 Risk Management Framework
BOARD OF DIRECTORS Formulate strategy to govern Define the levels of Risk Review Risk Management Process
RISK COMMITEES Formulate procedures to manage risk Communicate to Senior Management Staff Review Implementation Address urgent issues. Provide Functional Approvals Report to Board of Directors
Functional Departments Implement Risk Management Procedures Provide Feed Back of Implementation Report New Requirements to Committee
Major Catagories of Risk and approach to Managing be amended from time to time. Thus calling for greater flexibility / adoptability in the governed 1. Strategic Risk areas of the business. 1.a) Marketing Risk The Risk arises when there is a gap between the The company looks at the global regulatory product offering by the company and the customer changes and asses the compatibility as a guidance requirement or when the operations do not meet towards future changes in the local environment. the social and economic requirements. Further it maintains a constant dialogue with the regulatory authorities to ensure that any deviations The company looks at its SWOTs in relation are corrected at the earliest. to the market requirements and conditions and the regulatory requirements to ensure that the 1.c) Reputational Risk organization coincide with the stake holder This is the risk of creating a negative perception requirements. Periodic updates are taken from the about the company, that could be due to an sales executives to understand changing demands incident different from what the customers or of customers and are embedded in formulation of society expects from the company. strategies. The marketing communication process is designed 1.b) Regulatory Risk to ensure that the company does not promise what Regulatory Risk is where the company does not the products do not offer. All advertising material meet the regulations governing the insurance and campaigns are monitored at the board level to industry or other relevant laws of the land. This ensure conformity with the products. Further in is applicable to the business operation as well as the event of any disputes on claims , the customers the assets of the company. The risk enhances with are given access to discuss it with a member of the fact that the regulatory requirements could the board. The company also confirms with the
Ceylinco Insurance PLC 65 Annual Report 2011 Enterprise Risk Management
regulatory requirements and maintains a constant decision to grant credit is arrived at after careful dialogue with them to ensure adherence. evaluation of customer profile and future potential. The outstanding debtors are analyzed at the 2. Underwriting Risk finance department and communicated to relevant 2.a) Pricing / Exposure Risk sales staff to communicate to the customer. If This risk arises when the company accepts risks the customer is non compliant the policies are at a price insufficient to meet the related claims. cancelled to give the correct performance and Further exposure to a particular type of risks avoid carrying risks which are not paid for. underwritten and a given customer would create 3. Financial Market Risks an imbalance of the risk profile of claims and consistency of business volumes 3.a) Concentration Risk The Investment / Asset portfolios of the company The company looks at the underwriting inherit greater risk if it is not prudently diversified. profitability of all products in pricing , making This not only increase default risk but also risk on use of the present socio economic conditions return. The portfolios need to provide securing and the past experience of the company. This of wealth as well as optimize yield and provide has paid good dividends for Ceylinco Insurance liquidity. This calls for investment in different which is evident in the income statement, being risk categories and different securities in a given the company with the best underwriting profit in category. the industry. Further the company looks at the customer profile and the mix of risks undertaken in The Investment Committee periodically asses formulating market penetration , development and the macroeconomic environment including the risk diversification strategies. investment guidelines set off by the Insurance Board of Sri Lanka , and formulate the strategy 2.b) Reinsurance Risk for investments. This includes the asset limits , cut This risk is twofold. Firstly the risk the company loss limits and procedures. The committee further exposes itself to claims by not re insuring adequate reviews the performance and the asset structure of risks. Secondly the inability of the re insurer to portfolios to ensure they are in line with the overall meet the claims due to technical or financial strategies of the company and the guidelines of the constrains. regulator.
The company has up to date followed a very 3.b) Liquidity Risk sound re insurance policy. This was evident during Liquidity risk is where a company does not have many catastrophic incidents in the past. Company enough cash or arrangements to meet payments as carefully analyzes the required profitability and they fall due. risk combination in formulating and reviewing reinsurance policy. Further the company look The Investment committee looks at the asset & at the present profile internationak ratings and liability structure of the company at present and past record and experience with the potential re also the forecasted. The investment portfolios insurers before selecting them. The re insurance is are structured to support a smooth cash flow for diversified among the a pool of re insurers who are known incidents and the relationships and the renowned as some of the best globally. reputation maintained with the financial markets in Sri Lanka gives the company direct access to 2.d) Credit Risk financial markets for efficient and effective liquidity Credit risk is the risk of debtors of the company generation. defaulting payment.
The company maintains a constant cordial dialogue with the credit customers and the
Ceylinco Insurance PLC 66 Annual Report 2011 3.c) Default Risk modules is restricted. This enhances the security of The risk of default on the interest or capital of data and information as well as bringing processes investments. Primarily caused by the financial to the knowledge of authorized persons. Further weakness of an institution that we made an the backup policy has defined back up cycles for investment. different areas making the system an easy recovery system. The investment committee sets clear investment limits for institutions as well as instruments, 4.b) People Risk further to the guide lines of the regulator. The The knowledge and business relationship of main criteria in the event of non-government people are a great asset to any organization. security investments are the rating of the Similarly the motivation level of employees and institution and the instrument. Further the the tacit knowledge are of immense value to committee does an independent checks on the the organization. There is a risk of losing it all balance sheet of the institution and any such if employees who posses them were to leave the investment is subject to approval by the committee. organization.
3.d) Market Risk The company has in place a very encouraging The risk on the market value of assets caused by financial and non financial reward scheme and a movements in the prices. Mainly the Interest Rate clear carrier path. The company reward structures Risk, Exchange Rate Risk and Equity Market price qualify employees for more benefits and rewards as fluctuations. they provide a long service to the company.
The Investment committee looks at the maturity 4.e) Control Risk. structure and duration of Fixed Income Portfolios The risk of internal procedures not being followed and the quantum of Forex assets in relation to or misuse of authority or company assets and the Forex requirements. The committee looks at fraudulent reporting. the market value of all tradable securities and the future economic outlook and does adjustments to The company has authority limits and combination the portfolios, while cut loss limits are imposed to of authorized signatories for financial transactions. hedge against adverse movements unforeseen. Further advance security and safe wallet procedures are followed for physical security of 4. Operational Risks valuable documents. Clear segregation of duties and live audits discourage attempts for fraud. 4.a) Information Technology Risk The company operates fully integrated information system , which facilitate business functions and reporting (financial and other). This creates a competitive edge in speed of service with a island wide branch network. The edge it has provided itself expose the itself to technology being obsolete and communication breakdown.
The system is protected with sophisticated fire walls and passwords. Further different authority limits are imposed on need to know basis. The IT system also has a partitioning system where automatic flow of data among different sensitive
Ceylinco Insurance PLC 67 Annual Report 2011 Enterprise Risk Management Life Insurance
The Risk Management Framework
Board of Directors
Systems ALM Operational Risk Strategic Risk Committee Committee Committee Committee
Technical Investments/ Operational ICT Business Regulatory (Underwriting/ Liquidity Risk Risk Risk Claims/ Actuarial)
The Board of Directors The Regulatory Risk Committee is headed by Director / The Board of Directors provides an oversight and Deputy Chief Financial Officer supervisory role of the entire risk management framework. The findings of each of the four committees Systems Risk Committee are discussed with the Directors and if required, The Systems Risk Committee oversees the risks relating necessary actions are initiated. to information, communication and technology (i.e. ICT risks). Operational Committee The Operational Committee monitors the operational The Systems Risk Committee is headed by the Chief risks faced by the Company. Operational Risk relates to Information Officer. the loss arising from failed internal processes, people and external events. Asset Liability Management Committee The Asset Liability Management (ALM) Committee The Operational Risk Committee is headed by Senior oversees the risks directly pertaining to both Assets Assistant General Manager (Operations) and Liabilities. In recent times, the global approach has been to manage assets and liabilities together. The sub Strategic Risk Committee committees consist of the Investments and Liquidity The Strategic Risk Committee is composed of two Committee and the Technical Committee. subcommittees. These are mainly the Business Risk Committee and the Regulatory Risk Committee. The Investment Committee is headed by Portfolio Manager (Investments). The Business Risk Committee is headed by Deputy General Manager (Business Development) The Technical Committee is headed by Assistant General Manager (Technical).
Ceylinco Insurance PLC 68 Annual Report 2011 Enterprise risk management is a holistic approach to Credit Quality Assessment - Bank Deposits assessing the risks faced by a firm and benchmarking Value as per Rating* the mitigation strategies that have been adapted by the Balance Sheet Management. The report is intended for the stakeholders (including accrued of the firm. It highlights the risk and mitigation strategies interest receivable) Rs. in the following key areas: Bank Deposits 1. Credit risk Seylan Bank PLC 1,101,113,000 A- 2. Liquidity risk Sampath Bank PLC 1,557,474,000 AA- Hatton National Bank PLC 1,833,400,753 AA- 3. Operational risk DFCC 1,979,354,947 AA 4. Strategic risk Commercial Bank of Ceylon PLC 1,101,352,000 AA Credit Risk National Development Bank 1,830,123,973 AA Arising from the financial loss due to an asset default Nations Trust Bank 215,304,619 A or a delay in payment by counterparty. This can be Bank of Ceylon 2,628,706,576 AA+ measured by the credit rating (i.e. financial ability) of Peoples’ Bank 3,075,133,836 AA counterparty. Union Bank 26,027,397 BB+ Honkong & Shanghai The investment specific credit assessment is provided Banking Corporation Bank 514,102,740 AAA below. National Savings Bank 2,919,859,000 AAA Total 18,781,952,841 Credit Quality Assessment - Sovereign Assets
Cost Value as per *Source: Fitch Sri Lanka as of 31/12/2010 Balance Sheet The fixed income portfolio comprises of high quality (including accrued assets and is reinvested in a prudent manner to safeguard interest receivable) Rs. the interests of both policyholders and shareholders. Sovereign Assets The counterparties are all leading financial or state Government Securities 13,259,151,753 institutions and hence the credit risk is considered to Total 13,259,151,753 be low. The assets have also been evenly spread between different private/public institutions. Credit Quality Assessment - Corporate Debt Value as per Rating* Liquidity Risk Balance Sheet The liquidity risk is the risk of being unable to meet (including accrued immediate financial obligations. interest receivable) Rs. The cash inflows are greater than the cash outflows on Corporate Debts a monthly basis. A summary of an average monthly cash Bank of Ceylon 529,378,416 AA- inflow/outflow is given below. Hatton National Bank 541,778,480 A+ Seylan Bank 388,995,724 BBB+ Average Cash inflow: Rs. 1.1 Billion Sampath Bank 266,838 A+ Average Cash Outflow: Rs. 750 Million Nations Trust Bank 285,920,235 A- Average Net inflow per month: + Rs. 350 Million DFCC Vardana 74,102,782 A+ Central Finance PLC 272,903,825 A Others 306,512,381 Total 2,399,858,682
*Source: Fitch Sri Lanka as of 31/12/2010
Ceylinco Insurance PLC 69 Annual Report 2011 Enterprise Risk Management
Investment income is a significant cash inflow and Strategic Risk Assessment hence the liquidity position of the firm will be adjusted The strategic risk refers to the array of external events based on investment outlook in the future. If the rates that could destroy the Company’s value proposition and decline the potential investment income will be lower competitiveness. The following strategic risks have been v.v. On another note the policyholder demands are identified: 60-70% of the cash outflows on a monthly basis. This includes surrender, benefit payments, maturities etc. Risk (+/-) Strong premium growth and expansion of the core- Regulations The implementation of business-model (i.e. need based life cover) has resulted Risk Based Capital in significant cash inflows for the year 2011. Agents Attrition rate of agency Competitors Growth in the number Buffer of niche participants As a buffer, the firm maintains the following to Consumer behavior Changing demographics are strengthen the liquidity ratio. resulting in demands for different insurance products. 1. Overdraft Facilities 2. Repo investments
The overall liquidity position is strong given the high renewal and new business premium. This is also coupled by the consistent investment income.
Operational Risk Assessment Operational risk is the risk arising from the failure of internal processes and procedures. To mitigate the operational risks, the management has undertaken necessary action and assesses each action on a regular basis. A sample of the management actions per department is given on next page:
Ceylinco Insurance PLC 70 Annual Report 2011 Department Control Assessment
Life/Non Life Operations Underwriting limits Annually Approval cycle Annually Branch rotation As per Management Discretion Branch Visits and reports from a team Monthly visits consists of members from finance, operations and internal auditors Finance Approval cycle Continual Authorisation limits Continual Internal audit Continual Job rotation Continual Sales Force Review of attrition Continual Monthly monitoring of terminations and resignations Continual Establishment of a MIS for the sales force performance Continual Actuarial Actuarial Valuation of Life performed by Towers Watson Annual and IBNR/IBNER estimates are provided by M/s K.A. Pandit Product development Pricing from Towers Watson/ Milliman actuarial consultants As needed Information Technology Virus Detection software Continual Review of IT security Continual Review of physical security of IT infrastructure Continual Regular review of IT vendors Annually Investments Review of Investments Weekly Approval Cycle Continual Internal Audit Continual Sales Administration Review of agency performance Continual
Ceylinco Insurance PLC 71 Annual Report 2011 Branch Network Kantale Ruwanwella Marawila Karapitiya Sea Street Branch Mawaramandiya Kataragama Seeduwa Meegalewa - General Kattankudi Tangalle Miriswatte Katugastota Thalawakele Morawaka Katunayake Thalawathugoda Muttur Kegalle Thambuttegama Naiwala Kekirawa Thanamalwila Naula Kelaniya Thimbirigasyaya Nivithigala Kiribathgoda Tissamaharama Padalangala Kiriella Town Hall Padiyathalawa Kirindiwela Trincomalee Padukka Kochchikade Uragasmanhandiya Pannala Kohuwala Vavuniya Poojapitiya Kollupitiya Veyangoda Pottuvil Kotahena VIP Centre Pulmuddai Kotikawatte Wadduwa Malabe Kottawa Walasmulla Kurunegala Kuliyapitiya Warakapola Rajagiriya Kurunegala Wariyapola Rakwana Kuruwita Wattala Ranna Mahabage Wattegama Ridigama Mahaiyawa Welimada Sammanthurai Mahara Weliveriya Seruwila Maharagama Wellawatte Siyambalanduwa Mahiyangana Wellawaya Sooriyawewa Maho Wennappuwa Teldeniya Malabe Yakkala Thirappane Manipay Yakkalamulla Thalawa Mannar Yatiyantota Thalgaswela Maradana Udubaddawa Marandagahamula Udugama Matale Udugampola Matara Uhana Mattakkuliya Distribution Urubokka Matugama Counters Valaichchenai Mawanella Welmilla Mawathagama Ahangama Weeraketiya Medawachchiya Anamaduwa Wellampitiya Melsiripura Arawwala Messenger Street Baddegama Middeniya Baduraliya Minuwangoda Batapola Mirigama Beliatta Ceylinco “VIP” Moneragala Beruwala Rest Spots Moratumulla Borupana Moratuwa Deiyandara Induruwa Mount Lavinia Deraniyagala Kitulgala Narammala Dharga Town Kuruwita Nattandiya Divulapitiya Melsiripura Branches Nawalapitiya Elakanda Pussellawa Ceylinco “VIP” Rest Spots Negambo Eravur Tangalle Nelliaddy Galagedara Warakapola Neluwa Gampaha – BOC Akkaraipattu Chavakachcheri Gampola Nikaweratiya Gelioya Akurana Chilaw Ganemulla Nittambuwa Godagama Akuressa Chunnakam Giriulla Nochchiyagama Gomarankadawala Alawwa Dalupotha Godakawela Nugegoda Habarana Aluthgama Dambulla Grandpass Nugegoda II Hakmana Ambalangoda Dankotuwa Hambantota Nuwara Eliya Haldummulla Ambalantota Dehiattakandiya Hanwella Padaviya Halgaswita Ampara Dehiwala Hatton Pallebedda Hatharaliyadda Angunakolapelessa Dematagoda Hettipola Pamunugama Hemmathagama Anuradhapura Deniyaya Hikkaduwa Panadura Hingurana Atchuvely Digana Hingurakgoda Pannipitiya Hiripitiya Athurugiriya Dikwella Homagama Passara Horuwpathana Attidiya Divulapitiya Horana Peliyagoda Imaduwa Avissawella Dummalasuriya Imaduwa Pelmadulla Ingiriya Badulla Eheliyagoda Imbulagoda Pettah Kahatagasdigiliya Bakamuna Elpitiya Ja-Ela Pilimathalawa Kahathuduwa Balangoda Embilipitiya Jaffna Piliyandala Kamburugamuwa Bambalapitiya Embuldeniya Kadawatha Pitakotte Kandeketiya Bandaragama Enderamulla Kaduruwela Pitigala Katupotha Bandarawela Eppawala Kaduwela Polgahawela Katuwana Battaramulla Fort Kahawatte Polonnaruwa Kinniya Batticaloa Galaha Kalawana Puttalam Kolonna Bibile Galenbindunuwewa Kalmunai Raddoluwa Kotiyakumbura Bingiriya Galewela Kalpitiya Ragama Lunugamwehera Biyagama Galgamuwa Kalutara Rambukkana Kegalle – Main Street Boralesgamuwa Galle Kamburupitiya Ratmalana Maligawatte Borella Galnewa Kandana Ratnapura Maoya Chankanai Gampaha Kandy Rikillagaskada Maradamunai 01. Aluthgama 02. Athurugiriya 03. Attidiya 43 04. Baduraliya 48 13 05. Bambalapitiya 52 74 06. Bandaragama 66 07. Battaramulla 84 08. Biyagama 29 09. Boralesgamuwa 47 71 53 10. Borella 11. Dehiwala 67 98 12. Dematagoda Gampaha 13. Divulapitiya 17 78 32 14. Embuldeniya 24 63 18 86 95 15. Enderamulla 56 28 89 16. Fort 76 64 17. Gampaha 18. Ganemulla 23 19. Grandpass 93 20. Hanwella 38 39 25 21. Homagama 85 75 31 22. Horana 15 23. Imbulgoda 93 30 35 12 59 9 44 24. Ja-Ela 10 998 25. Kadawatha 60 42 36 26 16 46 72 26. Kaduwela 19 70 27. Kalutara 34 5 69 28. Kandana 62 7 80 92 33 20 29. Katunayake 77 54 14 68 97 41 11 3 55 2 30. Kelaniya 40 37 31. Kiribathgoda 51 58 21 Colombo 68. Thalawathugoda 9 32. Kirindiwela 79 87 69. Thimbirigasyaya 65 82 100 33. Kohuwala 70. Town Hall 96 34. Kollupitiya 91 71. Veyangoda 61 35. Kotahena 72. VIP Centre 49 36. Kotikawatta 73. Wadduwa 50 37. Kottawa 74. Warakapola 38. Mahabage 75. Wattala 39. Mahara 76. Weliveriya 90 6 40. Maharagama 77. Wellawatte 22 41. Malabe 78. Yakkala 42. Maradana 57 43. Marandagahamulla Distribution 44. Mattakkuliya Counters 45. Matugama 46. Messenger Street 79. Arawwala 47. Minuwangoda 80. Baduraliya 73 Kalutara 48. Mirigama 81. Beruwala 49. Moratumulla 82. Borupana 50. Moratuwa 83. Dharga Town 27 51. Mount Lavinia 84. Divulapitiya 52. Negambo 85. Elakanda 53. Nittambuwa 86. Gampaha – BOC 4 54. Nugegoda 87. Godagama 55. Nugegoda 11 88. Halgaswita 56. Pamunugama 89. Hiripitiya 57. Panadura 90. Ingiriya 45 58. Pannipitiya 91. Kahathuduwa 81 59. Peliyagoda 92. Malabe 60. Pettah 93. Maligawatte 1 83 61. Piliyandala 94. Mawaramandiya 62. Pitakotte 95. Miriswatte 63. Raddoluwa 96. Padukka 64. Ragama 97. Rajagiriya 65. Ratmalana 98. Udugampola 66. Sea Street Branch 99. Wellampitiya 67. Seeduwa 100. Welmilla
Ceylinco Insurance PLC 73 Annual Report 2011 Branch Network - Life
Kolonnawa Kotahena Kottawa Kuliyapitiya Kurunegala Maharagama Mahiyangana Maho Malabe Manipay Mannar Maradana Matale Matara Matugama Mawanella Mawathagama Medawachchiya Melsiripura Middeniya Minuwangoda Mirigama Moneragala Moratuwa Narammala Nattandiya Negambo Nelliaddy Neluwa Nikaweratiya Nittambuwa Nochchiyagama Nugegoda Nuwara Eliya Padaviya Panadura Panduwasnuwara Pannala Pelmadulla Peradeniya Pilimathalawa Piliyandala Puttalam Ragama Rambukkana Ratmalana Akkaraipattu Chunnakam Horana Ratnapura Akuressa City Office Ingiriya Rikillagaskada Alawwa Dambulla Ja-Ela Ruwanwella Aluthgama Dankotuwa Jaffna Suriyawewa Ambalangoda Dehiattakandiya Kadawatha Teldeniya Ambalantota Delgoda Kaduruwela Thambuttegama Ampara Dematagoda Kaduwela Tissamaharama Anamaduwa Deniyaya Kahatagasdigiliya Trincomalee Anuradhapura Divulapitiya Kalawana Uragasmanhandiya Atchuvely Eheliyagoda Kalawanchikudy Valaichchenai Athurugiriya Elpitiya Kalmunai Vavuniya Avissawella Embilipitiya Kalutara Veyangoda Badulla Galenbindunuwewa Kamburupitiya Wadduwa Balangoda Galgamuwa Kandana Warakapola Bandaragama Galle Kandy Wariyapola Bandarawela Gampaha Kantale Wattala Battaramulla Gampola Katugastota Wattegama Batticaloa Ganemulla Kegalle Welimada Beliatta Godakawela Kekirawa Weliveriya Beruwala Hanwella Kelaniya Wellawatte Boralesgamuwa Hatton Kesbewa Wellawaya Borella Hingurakgoda Kirindiwela Wennappuwa Chavakachcheri Homagama Kirulapone Yakkala Chilaw Kochchikade
Ceylinco Insurance PLC 74 Annual Report 2011 33 10 35
32 42 36
11 4
16 12 Gampaha 20 45 23 40 17 8 01. Aluthgama 02. Athurugiriya 44 03. Bandaragama 21 04. Battaramulla 25 05. Boralesgamuwa 06. Borella 07 27 18 30 9 07. City Office 6 2 42 4 08. Delgoda 13 09. Dematagoda 34 10. Divulapitiya 46 24 37 11. Gampaha 28 29 Colombo 12. Ganemulla 5 26 13. Hanwella 14 14. Homagama 41 15. Horana 16. Ja-ela 34 39 17. Kadawatha 22 18. Kaduwela 19. Kalutara 15 20. Kandana 38 3 21. Kelaniya 22. Kesbawa 23. Kirindiwela 24. Kirulapone 25. Kotahena 26. Kottawa 43 27. Kolonnawa 28. Maharagama Kalutara 29. Malabe 30. Maradana 19 31. Matugama 32. Minuwangoda 33. Mirigama 1 34. Moratuwa 35. Negambo 36. Nittambuwa 31 37. Nugegoda 38. Panadura 39. Piliyandala 40. Ragama 41. Ratmalana 42. Veyangoda 43. Wadduwa 44. Wattala 45. Weliveriya 46. Wellawatte 47. Yakkala
Ceylinco Insurance PLC 75 Annual Report 2011 The Year’s Events - General
Ceylinco VIP Creates History With Warranty and compensation to three passengers for injuries in the Insurance event of an accident.
Ceylinco Insurance – General introduced yet another Ceylinco Insurance partners with ‘V’ Awards – breakthrough in motor insurance with the innovative Shining a Light On Those Who Serve In Silence concept of Warranty Insurance for the motoring public ‘V Awards’ is a project initiated by the National Steering of Sri Lanka. The advantage in Warranty Insurance Committee for the International Year of Volunteers in is that it pays for the mechanical defects of the parts collaboration with News 1st and Sirasa TV. Ceylinco in re-conditioned vehicles that are covered under Insurance joined in this initiative as a partner. the insurance, during the first year from the date of purchase. Brand new vehicles will be given an extended As last year marked the 10th anniversary of the warranty of up to two years on top of the warranty International Year of Volunteers, the concept behind given by the manufacturer. This scheme is hailed as this project was to honour individuals, who made an an industry first that enhances and adds value to the extraordinary and selfless contribution to society. It concept of insuring a vehicle. is a noted fact, that Sri Lanka lacks a solid platform, which recognises the enormous contributions made Regular vehicle insurance only settles claims if the by volunteers to the economy and society at large: ‘V vehicle has met with an accident. But with Warranty Awards’ aim to fill this void. This initiative was designed Insurance, Ceylinco VIP On the Spot offers the vehicle to recognise and reward the most outstanding volunteer owners yet another opportunity to have a comprehensive contributions at a national level. cover for several parts of the vehicle against manufacturing defects. In order to take this outstanding service closer to the motoring public the company tied- up with vehicle dealers and car sales agents.
A unique cover for three wheel owners A unique insurance cover, offering a host of benefits for three wheel owners and their families was introduced by Ceylinco Insurance – General. Over 500,000 three wheel owners in the country will immensely benefit under this insurance scheme as it includes covers such as a payment of Rs 100,000 to the family in the event of the demise of the three wheel driver as well as the payment of balance lease installments up to Rs 100,000/- along with third party property damage of up to Rs 200,000
Ceylinco Insurance PLC 76 Annual Report 2011 LMD ranks Ceylinco Insurance the Highest Rated “When The Going Gets Tough- The Tough Get Insurance Company for 2011 Going” – Ceylinco Insurance launches book on its The widely respected business magazine Lanka Monthly impressive history Digest in its December 2011 edition ranked Ceylinco Ceylinco Insurance launched a book that traces its Insurance once again in the top slot as the highest unique journey of growth. Authored by Mr. J. Godwin ranked insurance company. Since the inception of LMD Perera, the current Chairman of the Company, the book rankings, recognised as a benchmark on corporate titled “When The Going Gets Tough The Tough Get performance, Ceylinco Insurance has retained its Going” covers the 72 year history of the Company. prestigious position as the country’s highest ranking insurance company. The book is essentially a journey through the times, consisting of historic pictures and recent milestones. It Recognised as the Sri Lankan version of the Fortune outlines the Company’s unique place in the insurance 500, the LMD 50 outlines the Sri Lankan companies industry and the country, capturing key historic with the most dynamic and exceptional performances. moments closely entwined with many momentous landmarks. The book further reiterates that no other company in Sri Lanka has faced crises as Ceylinco Insurance has – and emerged triumphant.
The Company believes it will be an ideal case study for entrepreneurs, students and the general public interested in great corporate success stories.
General Division employees rewarded with a Tour to Thailand For the eighth year, over 200 employees of the General Division toured Thailand, for five days. This was in appreciation of the outstanding contribution made towards the success of the company during the previous year. The tour comprised of many get-togethers excursions and a workshop held in Bangkok.
Ceylinco Insurance PLC 77 Annual Report 2011 The Year’s Events - General
Saluting our Valiant Heroes Ceylinco Insurance – General recognised and handsomely rewarded its dynamic and dedicated sales team at the Annual Sales Conference and Awards Ceremony 2010. The glittering event showcased the company’s outstanding talent, rewarding its top performers who surmounted all obstacles, in order to provide their customers an unparalleled service throughout the year.
The gala event, held under the theme: “When it comes to serving our customers nothing stands in our way”, was attended by over 1,300 sales personnel and senior members of the staff. Over 550 sales personnel received awards, accorded on stringent rewards criteria; the top Three wheel owners feted with a get-together for the achievers were categorised as Members, Certificate entire family Members, and the Bronze, Silver and Gold categories, rising to the zenith, the much coveted Hall of Fame. Ceylinco Insurance held a series of get-togethers for Along with rewards based on these categories, seven three wheel owners and their families in several parts members were recognised and welcomed into the of the country which were well received. Three wheel prestigious Hall of Fame, of which two qualified for a owners who showed a great enthusiasm to participate brand new BMW car. at these events were full of praise for the company for organizing these events which they called a first of its kind. They further expressed their gratitude to the company for considering a thing which no other company had thought of. Over 150 three wheel families participated at each of these events. All were outdoor events and had games and entertainment for kids, spouses as well as for the owners. Winners were given valuable prizes such as cookers, fans, household items and gift vouchers.
BASL Members Benefit with On The Spot Solutions Ceylinco Insurance – General , signed a Memorandum of Understanding with the Bar Association of Sri Lanka, whereby all members of the BASL are entitled to exclusive benefits when they obtain Ceylinco VIP On The Spot insurance.
Through this arrangement, the over 8,000 strong membership of the BASL are eligible for Sri Lanka’s most comprehensive motor insurance solution, providing a host of unmatched benefits and on the spot claim settlement.
Ceylinco Insurance PLC 78 Annual Report 2011 Annual Cricket Tournament 2011 Ceylinco VIP powers Kingswood Rugby The Annual Cricket Tournament 2011 was held at Ceylinco Insurance reiterated their belief in Kingswood’s the BRC grounds on the 11th of December 2011 with rugby by agreeing to be the main sponsor for the 5th over 1300 employees participating from all over the consecutive year. The sponsorship covered the costs of country. The event kicked off at 8.30am with 23 teams equipment, attire, transport and health care needs of the participating in the knock out tournament. Finally, 1st XV rugby squad of the school which was placed 5th after much competition the Uva region emerged as at the schools ‘ A ‘ Division League. champions and Metro Outer came as runners up. The event proved to be a fun filled event providing the ideal Kingswood College has been at the apex of local schools’ opportunity for colleagues to mix and mingle. rugby for many years and emerged as runners-up at the all island schools sevens tournament and semi- finalists in the schools knockout tournament. The school has produced many national and ‘A ’ division players over the years. Three of Kingswood players were selected to the under 20 National Rugby Squad in 2011. Many senior players of Kingswood secured positions in the island’s most prestigious Rugby Clubs including 6 players representing Central province and 4 players representing 3 different teams in the Carlton International sevens.
Ceylinco Insurance PLC 79 Annual Report 2011 The Year’s Events - Life
Recognition for top achievers
The Life Division celebrated its 7th successive year at the helm of the industry by honouring 144 top achievers who contributed to its growth in 2010.
Top performers were presented trophies and certificates and rewarded with 95 overseas trips to Bangkok and Singapore including Star Cruises, at which their family members were able to join them. The glitzy 22nd edition By sending their details in the pre-paid envelopes of the Division’s Annual Awards was followed by five- enclosed with the bonus certificates, policyholders were star dining and entertainment. also able to enter a draw at which 500 winners received a range of valuable branded gift items. Branch Sales Heads, Unit Heads and Sales Consultants from all districts in Sri Lanka were present at the awards Our policy of declaring bonuses from the very first year at which a notable aspect was the strong representation of issue of a policy, enabled even policyholders who of branches in the Jaffna peninsula and the Eastern obtained policies in December 2010, to receive bonus province in the honours list. allotments as at 31st December of the same year.
The top award winners were: Best Branch Head – Branch expansion Platinum Category Mr. H. M. J. Banda (Kaduruwela Branch); Best Unit Head – Platinum Category Mr. P. B. R. N. Prasad (Kaduruwela Branch) and Best Sales Consultant – Platinum Category Mr. A. I. P. Manjula (Ambalantota Branch) and Gold Category Mr. T. Sasikumar (Atchchuvely Branch).
Annual bonuses worth over Rs. 1.5 billion to policyholders We paid Rs. 1.59 billion in annual bonuses to 310,000 policyholders from the surplus generated by our Life Fund in 2010.
The value of annual bonuses paid in 2011 exceeded that of the previous year by Rs. 200 million, an increase of The Life Division further strengthened its branch 14.4 per cent. network in 2011 with the opening of a new branch in
Ceylinco Insurance PLC 80 Annual Report 2011
Kurunegala and a new City Office in the premises of its The event culminated with the ‘WW’ group emerging former headquarters in Colombo 3. During the year we victorious and the ‘MT’ group emerging runners-up. also commenced worked on another branch which will serve as our operational nucleus in Gampaha.
The centrally-situated and easily accessible new City Office now accommodates a Call and Customer Relationship Management (CRM) centre, Audit Division, Central Payment Division, Quality Assurance Division, a gift shop and the Group Assurance Division.
Both the new Kurunegala branch, which comprises of 10,275 square feet of space on five levels, and the Gampaha branch which will comprise of 8,975 square feet of space, are located in premises owned by the Life Division and increase the number of branches in Carefree day at Leisure World for ‘Family Savari’ purpose-designed company owned buildings to 29. winners
Cash bonuses for loyal policyholders
We disbursed Rs. 38 million in Cash Bonuses to our policyholders during the ‘Avurudu’ season, continuing a Nearly 2,000 people came together in fun and frolic unique tradition begun several years ago. when we treated them to a carefree day at the Leisure World theme park as part of the fourth edition of our These cash bonuses were received by 9,695 policyholders ‘Family Savari’ programme. in 2011 at the eighth edition of the annual initiative. The bonuses in the form of immediately encashable cheques, The 500 policyholder families that qualified for the were home–delivered by our 5000 strong sales team on event, drawn from all districts of Sri Lanka, were the 9th and 10th of April, 2011. provided with free transport to and from the location, meals and refreshments for the day and the opportunity Sports Festival of the Life Division to entertain themselves at the park’s many rides and slides. Around 4,000 staff and sales professionals of the Life Division from 180 branches joined the fun and frolic at In addition, four families chosen at a draw were provided the Division’s eighth annual sports festival in 2011. with helicopter tours, making the event extra memorable for them. Strong participation was seen from representatives of our branches in the North and the East at the event, at which 12 groups competed in Athletics including Track and Field Events, Football, Volleyball, Netball, Cricket, Tug-O-War, Fancy Dress Parade and fun games.
Ceylinco Insurance PLC 81 Annual Report 2011 The Year’s Events - Life
‘Family Savari’ winners visit Singapore Cruises off Colombo for ‘Family Savari’ winners Our policyholders were provided a sunset cruise off the coast of Colombo when we treated 600 people from all over Sri Lanka to ‘Jetliner’ cruises as part of the ‘Family Savari’ programme.
Apart from a view of Colombo’s skyline from the Indian Ocean and a scenic sunset from the deck of the ship, policyholders were treated to a sumptuous dinner, musical entertainment and magic shows at the event.
Two cruises, each accommodating 75 lucky policyholders and their families, were organised by the Life Division in 2011. A noteworthy aspect was participation from areas such as Jaffna, Batticaloa, Trincomalee, Kandy, Ampara, Kegalla, Akkaraipattu, Anuradhapura and We rewarded fifty of our lucky policyholders and their Polonnaruwa. For most of these participants, it was their families with an exciting four day tour in Singapore as first experience of an ocean cruise. part of the ‘Family Savari’ programme. We also made arrangements to provide transport and Visits to some of the most popular attractions of one night’s accommodation to those who came from Singapore including Sentosa Island, the Merlion statue, distant areas to join the cruises. China Town, Little India, Red temple and the National Orchid Gardens made the tour a highly memorable one for the chosen policyholder families.
At Sentosa, the tour group was entertained with an evening of song and drama at the beach and Cable Car and Sky Train rides. A visit to the spectacular ‘Underwater World’ and ‘Images of Singapore’ Museum was also part of the itinerary.
The popular new attraction, the ‘Crane Show’ and the ‘Song of the Sea’ Laser show and an exciting shopping experience at Mustafa shopping mall and China Town made the tour even more enjoyable for policyholder families. ‘Life Insurance Week’ All chosen policyholder were provided star class accommodation at the Copthorne King’s Hotel and The Life Division deployed nearly 5,000 sales personnel dining arrangements were made at a range of diverse in a concerted effort to educate the public on the reputed restaurants enabling the tour group to enjoy the importance of Life Insurance during the fourth Life varied gastronomic delights that Singapore has to offer. Insurance Week which was observed from 11th to 17th February 2011. Among the policyholder families who were chosen to be rewarded at this phase of the ‘Family Savari’ The programme, which comprised of a series of were physically challenged persons who were aided interactive events in all parts of the country, was by assistants and those from towns and villages in the preceded by a generic media campaign. We also North and East. launched an initiative which entitled chosen new policyholders to win valuable prizes by obtaining a Life Insurance policy during the week.
Ceylinco Insurance PLC 82 Annual Report 2011 Mobile teams of sales professionals from the Life Fourth Retirement Planning Month Division wearing a badge with the words ‘Ask me about The Life Division stepped up its efforts to promote Life Insurance’ conducted Need Analyses for those retirement planning in the country with its fourth interested in obtaining life insurance. Our staff also annual Retirement Planning Month from 1st to 31st visited schools to brief teachers and parents on the May 2011. importance of life insurance and held public awareness programmes in towns and cities. This included a mass media campaign that focused on the relevance of retirement planning in the Sri Premium reward for ‘Premium Club’ members Lankan socio economic context, and several awareness campaigns throughout the month at branch level in cities and key provincial towns.
Complementing these efforts, we pledged that we will provide an attractive interest rate of nine per cent on Ceylinco Life Retirement Accounts (CRAs) in 2011 and took steps to reward ten persons who responded to the campaign and their families with holiday packages to Singapore inclusive of air fares and accommodation for three days.
Support for National HR Conference 2011 The Life Division was the Principal Sponsor in the Life Insurance category of the National HR Conference 2011.
We treated a select group of our high net worth The event, which was organised by the Institute of customers to a new experience in family fun in the form Personnel Management Sri Lanka, was held on 28th of a seaplane excursion to the hill country capital Kandy. and 29th June 2011 in Colombo, under the theme ‘HR Powered Edge in a Booming Economy.’ Twenty chosen policyholders, designated as ‘Platinum’ members of the Life Division’s recently launched ‘Premium Club’ and their families were accorded this exclusive privilege as a reward for their loyalty. This was the first instance that an insurance company in Sri Lanka had used the SriLankan Airlines air taxi service for a loyalty rewards programme.
For the policyholders and their family members, it was an exciting first-time experience flying at low altitude in a propeller-driven seaplane.
The lucky winners took four flights to Kandy and were thereafter provided a coach ride to the plush Earls Regency hotel for lunch, tea, a gala dinner and breakfast. They returned to Colombo via the SriLankan Airlines air taxi service.
Ceylinco Insurance PLC 83 Annual Report 2011 Tangible Values, Powerful Brands
Ceylinco VIP On The Spot Ceylinco Life – Staying Closer to the Customer… The Scots used to say ‘there Insurance is all about forming is no greater fraud than a relationships and forging long promise not kept’! The saying lasting bonds. For Ceylinco forms the central premise Life, maintaining the edge of of VIP, the flagship brand of leadership has meant playing Ceylinco Insurance – General, a strong role in the lives of its which firmly believes in making customers, listening to them and promises that can be kept, and empowering them to lead lives ensuring that once a promise is made, it is kept. assured of protection and care.
One of the greatest writers of our times, Stephen As the market leader in life insurance in Sri Lanka, King, said that ‘a product can be quickly outdated, Ceylinco Life has consistently sought to bring the but a successful brand is timeless.’ Ceylinco VIP On concept of life insurance closer to all Sri Lankans. Given The Spot fits the bill perfectly; being of a vibrant and the fact that a mere 10.9% of all people are insured in dynamic disposition, and being firmly entrenched in the country, Ceylinco Life has always been aware of the hearts and minds of the Sri Lankan populace, as the the opportunity to add meaning to the concept of life motor insurance brand of choice. VIP On The Spot is a insurance. This is more so relevant against a backdrop of humane brand, developed and constantly evolving with life insurance accepted globally as a must-have service in intrinsic ties to the changing Sri Lankan psyche, geared both developed and developing economies. to always explore novelty through constant innovation, and aiming to lessen the burden on and console those in For Ceylinco Life, taking a powerful message of caring difficulty. and protection to the people has meant a journey that has been both fruitful and fulfilling. The company It was Howard Schultz of Starbucks fame, who maintains a strong brand presence in both rural said, ‘customers must recognise that you stand for and urban areas, bringing the customers closer to something’; and VIP On The Spot has lived up to that experiencing the company’s umbrella of security and premise. Formulated almost a decade ago, in 2003, loyalty. Ceylinco VIP On The Spot, stands for tangible values – innovation, speed and convenience, attributes that make In securing its leadership position in the market, it the firm favourite of the Sri Lankan motoring public. Ceylinco Life has had the privilege of adding many Surely, its position as the undisputed leader in the motor innovative services to the insurance industry. “Ceylinco insurance arena for eight consecutive years, and Ceylinco Life Rewards” is recognized in the insurance industry Insurance, winning the Power of People Award for Best as the only scheme that adds extraordinary value to Insurer, six years running, stands testimony to the fact the policyholders as well as their families. Pranama that this is no idle claim. Scholarships, Cash Bonuses to loyal policy holders and the opportunity to participate in a family adventure It was Scott Bedbury who said that ‘a great brand is a overseas under the ‘Ceylinco Life Family Savari” are story that is never completely told’, and VIP On The among the outstanding benefits offered under this Spot accordingly, being of an innovative nature by scheme. default, continues to evolve, keeping pace with the changing times and needs of Sri Lankans. Winning In addition, Ceylinco Life pioneered Ceylinco the Asian Innovation of the Year in 2003 was just the Retirement Accounts, a unique concept that introduced beginning: Ceylinco VIP On The Spot continues to forge retirement planning to Sri Lanka. Extensive awareness ahead, impelling the very concept of motor insurance programmes held island-wide on retirement planning forever forward. has succeeded in enabling Ceylinco Life to break new ground in retirement planning.
Ceylinco Insurance PLC 84 Annual Report 2011 Reinsurance Arrangements
NET RETENTIONS PER EVENT UNDER VARIOUS CLASSES OF INSURANCE - (GENERAL INSURANCE)
Class Net Retention per event including catastrophic events (Rs.)
Fire including Consequential Loss & Engineering 20,000,000/- Personal Accident including Travel Insurance 2,000,000/- All other Miscellaneous classes 5,000,000/- Marine Cargo & Marine Hull 15,000,000/- Motor Insurance including Third Party Liabilities Non Natural Catastrophic Events 10,000,000/- Natural Catastrophic Events 20,000,000/- Strike, Riots & Civil Commotion Nil Terrorism Nil
Claims above these limits are recoverable under our Reinsurance Programme.
RETENTIONS OF RISK UNDER VARIOUS CLASSES OF INSURANCE - (LIFE INSURANCE)
Class Maximum Net Retention per Life (Rs.)
Life / Accident 1,000,000/- Critical Illness 250,000/-
MAJOR TEN REINSURERS - (GENERAL INSURANCE) Reinsurer Country of Origin
Swiss Reinsurance Company Switzerland SCOR Re France Lloyd’s of London United Kingdom R+V Versicherung AG Germany Toa Reinsurance Company Limited Japan General Insurance Corporation (GIC Re) India Sirius International Insurance Corporation (Publ) Sweden Trust International Insurance & Reinsurance Company B.S.C. Bahrain Taiping Reinsurance Co. Ltd. Hong Kong BEST Re (L) Ltd. Malaysia
REINSURERS - (LIFE INSURANCE)
Reinsurer Country of Origin
Swiss Reinsurance Company Ltd. Switzerland Munich Reinsurance Company Germany
The security rating of all above Reinsurers are in compliance with the minimum security guidelines issued by the Insurance Board of Sri Lanka dated 19.12.2003.
Ceylinco Insurance PLC 85 Annual Report 2011 Board of Directors
1 2 3
4 5
6
1. Mr. J.G.P. Perera 2. Mr. A.R. Gunawardena 3. Mr. R. Renganathan - Chairman - Managing Director / - Managing Director / Chief Executive Officer (General) Chief Executive Officer (Life)
4. Mr. H.D.K.P. Alwis 5. Mr. E.T.L. Ranasinghe 6. Mr. W.C.J. Alwis - Director / Deputy Chief - Director / Deputy Chief - Director (Technical) / Chief Executive Officer (General)) Executive Officer (Life) Technical Officer
Ceylinco Insurance PLC 86 Annual Report 2011 7 8
9 10 11
12
7. Mr. P.D.M. Cooray 8. Mr. K.I. Dharmawardena 9. Mr. P.M.B. Fernando - Director / Head of Human - Director - Director / Chief Information Resources & Training (Life) Officer (General)
10. Mr. D.H.J. Gunawardena 11. Mr. P.A. Jayawardena 12. Mr. N.D. Nugawela - Director - Director / Chief Financial - Director / Chief Operations Officer (Life) Officer (General)
Ceylinco Insurance PLC 87 Annual Report 2011 Board of Directors
13 14
15 161
13. Mr. T.N.M. Peiris 14. Mr. D.W.P. Upali - Director (Finance) / - Director / Chief Financial Head of Finance Officer (General)
15. Gen. C.S. Weerasooriya (Retd.) 16. Mr. S.R. Abeynayake - Director - Director / Deputy Chief Financial Officer (Life)
Ceylinco Insurance PLC 88 Annual Report 2011 Mr. J.G.P. Perera companies in Sri Lanka. Furthermore, the first ever - Chairman venture capital company to be established in Sri Lanka, was also his brainchild. Mr J. Godwin Perera holds a Post Graduate Diploma in Marketing from the Chartered Institute of Marketing of He was appointed Director In Charge of the General UK (CIM ) and is also a Fellow of that institute. A former Division of Ceylinco Insurance in 1987. He introduced President of the Sri Lanka Institute of Marketing (SLIM) the visionary concept of a direct sales force for the he was awarded Honorary Membership for his services insurance industry in Sri Lanka. His was the idea that in marketing education where as the senior lecturer in transformed the sphere of insurance forevermore – On SLIM’s faculty he lectured to students preparing for the The Spot Claim Settlement! This unprecedented idea, CIM and SLIM examinations. He is a Life Member of which amounted to a global first, has been embraced and the Organisation of Professional Associations (OPA) – adopted by many other insurers the world over. In fact, having been nominated by SLIM and a member of the this very concept won the coveted Innovation of the Year Sri Lanka Institute of Directors. Award at the Asian Insurance Industry Awards in 2003. Under his able leadership, Ceylinco Insurance received a Mr Perera has served in both the public sector rare accolade – that of being among the top four General and private sector and held the positions of Head Insurance Companies in Asia, in 2000 and once again of Marketing – Bank of Ceylon; Group Marketing clinched the Innovation of the Year Award at the Asia Consultant – Aitken Spence PLC; Director Corporate Insurance Industry Awards in 2006. Under his guidance Planning – Lanka Milk Foods PLC. He has also served Ceylinco Insurance has held the position of market in several government appointed committees such as leader in Sri Lanka, continuously since 2004. Mr. Ajith the Steering Committee for the accelerated development Gunawardena was also behind the first ever overseas of the Bandaranaike International Airport to make it joint venture for Ceylinco Insurance – Sagarmatha a South Asian Hub Airport; the Committee to make Insurance of Nepal, the concept of which, later on, recommendations for the Apparel Industry to meet extended to the Maldives. Several strategic alliances the challenge of the termination of the Multi Fibre were also formed under his leadership with insurance Agreement; Committee to visit Japan and South Korea companies in the Middle East, in countries such as the and study the concept of Trading Houses with a view of United Arab Emirates, Bahrain, Kuwait, Oman and Qatar. introducing it to Sri Lanka.
He successfully negotiated key joint ventures with Indian He is the author of several articles on Marketing, giants Larsen & Toubro and the Aditya Birla Group; Management and on Tourism all of which were serialized alliances which resulted in the cement brand – Ultra in the news papers and in a leading business magazine. Tech, abundantly available throughout Sri Lanka. Under Last year his book ‘When the going gets tough; the the aegis of these joint ventures, the L & T Infocity, the tough get going’ which is a history of Ceylinco Insurance largest ever Call Centre in Asia, was established. was launched. Mr. Ajith Gunawardena has been the unyielding strength behind numerous other projects for Ceylinco, including Mr. A.R. Gunawardena power and energy projects in Belihuloya, Loggaloya and - Managing Director / Chief Executive Officer (General) Rajjammana. Mr Ajith Gunawardena joined the Ceylinco Group in 1978 as a Sales Manager, attached to the Polonnaruwa Mr. R. Renganathan Branch of The Finance, speedily rising to the position of - Managing Director / Chief Executive Officer (Life) Assistant General Manager – City Office. A Chartered Accountant by profession Mr. R. At The Finance, Mr Gunawardena was instrumental Renganathan joined Ceylinco Consolidated in 1983. in initiating the first-ever leasing and project financing He was entrusted with the task of setting up the Life division in Sri Lanka. Moreover, he set up the hire Division of Ceylinco Insurance after the Government purchase scheme for consumer durables and import of Sri Lanka permitted private insurers to enter the financing; pioneering concepts in the sphere of finance Insurance Industry in 1987.
Ceylinco Insurance PLC 89 Annual Report 2011 Board of Directors
A firm believer in the miracle of Life insurance, with the guidance of the MD/CEO – Mr. Ajith Gunawardena, a vision of protecting every Sri Lankan family with a which has become one of the key factors in the Ceylinco Life insurance policy, he has put together a Company’s exponential growth in a fast-paced economy. team of professionals who share this common objective. Ceylinco Insurance PLC has continued to maintain He was further involved in successfully implementing market leadership in the Sri Lanka Insurance Industry a unique system for the insurance sales force, and Ceylinco Life has won the Asia Insurance Review regarding effectively prospecting clients. The visionary Award for Corporate Social Responsibility in the methodology, practiced by the gamut of the sales force Asian Region. Mr. Renganathan is also a member of at all levels, has resulted in stupendous results for the LIMRA India/Sri Lanka Executive Board and was individual sales personnel, as well as the Company as a invited to speak at the LOMAL/LIMRA Strategic Issue whole. The system in question has also paved the way to Conference which was held in Kuala Lumpur. monitor and manage the direct sales force of Ceylinco Insurance – General. Upon achieving success in the field of Life Insurance, he has now ventured into the healthcare sector with the Mr. E.T.L. Ranasinghe idea of providing affordable healthcare facilities to the - Director / Deputy Chief Executive Officer (Life) people of Sri Lanka. Therefore, with the affiliation of the Washington Cancer Institute he initially set up a Cancer Mr. Ranasinghe has over 30 years of experience in Detection Centre and a Diabetes Centre. He has now set the mercantile sector in sales, marketing and strategic up a Cancer Treatment Centre with the latest state of the planning. He holds a MBA from the Postgraduate art technology. Institute of Management (PIM), University of Sri Jayawardenepura. He is also a Chartered Marketer and He is the Chairman of Ceylinco Healthcare Services Ltd. a Fellow of the Chartered Institute of Marketing, UK. and Citizen Development Business Finance PLC. He joined Ceylinco Limited as a Product Manager in September, 1986 and is one of the pioneer members of Mr. H.D.K.P. Alwis the team to set up the Ceylinco Insurance PLC, when - Director / Deputy Chief Executive Officer (General) the Company commenced operations in 1988.
Mr. Alwis joined the Company on 15th. May, 1990 and He is a Founder Member of the Chartered Institute prior to joining the Company from 1978 he worked at of Marketing, Sri Lanka Region and has held several M/s. Hatton National Bank, Lever Brothers (Ceylon) Positions in the Executive Committee, including that of Limited and Richard Peiris & Company in the field of the Senior Vice Chairman in the past. Sales and Marketing. He joined Ceylinco Insurance (General Insurance Division) as a Regional Manager and He currently serves as the Deputy Chief Executive was promoted as Assistant General Manager in 1992, Director of Ceylinco Insurance PLC - Life Division as Senior Assistant General Manager in 1996 and as and is also a Director of Ceylinco Healthcare Services Deputy General Manager in 1998. He was appointed to Limited. the Board on the 10th. of January, 2001, and currently serves as the Director / Deputy Chief Executive Officer Mr. W.C.J. Alwis of Ceylinco Insurance PLC - General Division. - Director (Technical) / Chief Technical Officer
He was instrumental in spearheading the Strategic Mr. Jagath Alwis graduated as a Bachelor of Science Alliances with leading Insurance Companies in the (B.Sc.) majoring in Mathematics and Physics and joined Middle East (UAE, Bahrain, Kuwait, Oman and Qatar), the National Insurance Corporation in 1982 as a Trainee. where Ceylinco Insurance promotes unique insurance He became an Associate Member of the Chartered solutions to migrant workers of all nationalities residing Insurance Institute, London (ACII) in 1985 and a Fellow in the Gulf. Member (FCII) in 1990. Also a Fellow Member of the Indian Insurance Institute (FIII), he is a Chartered He was also the key figure behind setting up the Insurer by profession. Mr. Alwis is a Fellow Member of Ceylinco Insurance branch network in Sri Lanka, under the Institute of Directors, U.K.
Ceylinco Insurance PLC 90 Annual Report 2011 Mr. Alwis joined Ceylinco Insurance Company in March, Mr. K.I. Dharmawardena 1988 as the Reinsurance Manager and also served in the - Director capacity of Chief Manager (Technical), Deputy General An Attorney-at-Law by profession Mr. Dharmawardena Manager (Technical) before being appointed to the was admitted to the Bar in 1976 with first class honours Board as the Director (Technical) in January, 1993 and and thereafter joined the Attorney General’s Department continues in the same position to date. in 1978 where he served until his retirement in 1999 holding the positions of State Counsel, Senior State He presently serves on the Boards of a couple of leading Counsel and Deputy Solicitor General. He has a Masters Eduction Institutions as the Chairman. Degree in International and Comparative Law from He is the past President of the Insurance Association of the Brussels University and is a Fellow of the Nuffield Sri Lanka (IASL) and the Vice President of the Ceylon Foundation and Japan Foundation. Mr. Dharmawardena Society for Prevention of Accidents (CESPA). has undertaken extensive legal research at the Institute of Advanced Legal Studies, University of London and Mr. Alwis has presented papers at many International the United Nations Far Eastern Institute in Tokyo, Japan. Insurance / Reinsurance Conferences and is a regular He has specialized in ICT and Business Law and held contributor to the International Insurance / Reinsurance many prestigious positions in Sri Lanka and overseas. press. In Sri Lanka he served as a Visiting Lecturer at the Sri Lanka Open University and Informatics Institute of Computer Studies and pioneered many research projects Mr. P.D.M. Cooray in Sri Lanka leading to Law reform in the fields of ICT - Director / Head of Human Resources & Training (Life) Law, Evidence and Criminal Law. He has extensive Mr. Cooray joined in March, 1985 as the Chief legal experience in Public Law, Criminal Law, ICT Law Instructor of the Key Security Services Limited. He and Business Law and has provided legal consultancy has been an employee of Ceylinco Insurance, since services to several large scale ICT and Business Projects it’s inception. He started his career in the Sri Lankan both in Sri Lanka and abroad. Presently he practices as Air Force as a Commissioned Officer. His career at a Legal Consultant in ICT and Business Law. He is the Ceylinco Insurance commenced as an Assistant Manager Chairman of Wanasevana Pvt. Ltd. He is the Chairman (Training), and in January, 1990 he was promoted as of the Remuneration Committee and a member of Manager (Human Resources), thereafter he held the the Audit Committee of Ceylinco Insurance PLC. Mr. posts of Assistant General Manager (Administration Dharmawardena is an “Independent” Non Executive and Human Resources) and Assistant General Manager Director. (Training). In 1998 he was promoted to the post of Deputy General Manager (Training). Mr. Cooray was Mr. P.M.B. Fernando appointed as a Director to the Board of Ceylinco - Director / Chief Information Officer (General) Insurance in September, 2001. Mr.Fernando was appointed to the Board in October Mr. Cooray is a Fellow of the Life Underwriters’ Training 2008 and heads the entire IT operation of Ceylinco Council (LUTCF) U.S.A. and a Chartered Insurance Insurance PLC - General Division. Mr. Fernando Agency Manager (CIAM). He played a very active role has a 15 year experience at International Computers in setting up the Sales Force of Ceylinco Life. He is an Limited (ICL). During this period he gained an in-depth internationally reputed speaker who has addressed many experience and knowledge in Computer Hardware, Life Insurance conventions and was the first South Asian Networking and Software. At the time of leaving ICL he non-member to address the MDRT which is the most held the post of Systems Engineer. He Joined Ceylinco prestigious Life Insurance convention in the world. Insurance in January 1993.
Mr. Fernando was responsible for setting up the Network which connects all the branches of the General Division through a virtual private network. Further, he was responsible for developing the fully integrated
Ceylinco Insurance PLC 91 Annual Report 2011 Board of Directors
Insurance application including the On the Spot Mr. N.D. Nugawela claim settlement process which revolutionized Motor - Director / Chief Operations Officer (General) Insurance in Sri Lanka. He was also responsible for Mr. Nugawela was appointed to the Board in September, setting up of computer systems for Ceylinco insurance 2001 and overlooks the administration of the Company’s overseas operations. General Insurance branches. Having had over 10 years experience at Insurance Corporation where he obtained Mr. Fernando has distinctions in NIBM’s Diploma a Diploma in Insurance. He joined Ceylinco Limited as in Computer Systems Design and in Computer a Liaison Officer in late 1980. In April, 1989 he joined Applications for Science and Technology from the Ceylinco Insurance (General Insurance Division) as a University of Sri Lanka, Colombo Campus. He also Branch Manager and was promoted as a Regional Sales has Diplomas in Business Management (NIBM) and Manager in 1991, as an Assistant General Manager in Marketing Management (SLIDA). Further he has also 1994 and as a Senior Assistant General Manager in 1998. completed the Diploma in Electrical Engineering and He held the post of Deputy General Manager (Branches) Engineering Apprentices’ Final at the University of Sri with effect form 2001. Lanka, Katubedda Campus. Mr. Fernando is a Member of Institute of Certified Professional Managers. Mr. Nugawela monitors the Technical and Claims functions of General Insurance and is overall in-charge Mr. D.H.J. Gunawardena of the “Nerve Centre” for claims processing. - Director
Mr. Gunawardena is a Fellow of the Chartered Institute Mr. T.N.M. Peiris of Management Accountants, U.K. He has around 40 - Director (Finance) / Head of Finance years of experience in various industries including Mr. Nihal Peiris is the Director (Finance) of the shipping, airline, mining, export and import trading. He Company. He graduated with Honours from the Sri has over 20 years of General Management experience. Jayawardenepura University with a Bachelor of Arts He is a Director of Hunter & Company PLC, Pelwatte (Economics Special) in 1982. He became an Associate Sugar Industries PLC, Pelwatte Dairy Industries Ltd., Member of the Institute of Chartered Accountants Lanka Canneries Ltd. and Heath & Company Ltd. He in 1984 and thereafter became a Fellow Member of is also the current Chairman of Citizens Development the Institute. He Heads the Ceylinco Financial & Business Finance PLC. He is the Chairman of the Consultancy Group (Ceyfco Group) as the Deputy Audit Committee and a member of the Remuneration Chairman/Chief Executive Director. Having worked at Committee of Ceylinco Insurance PLC. M/s. Associated Motorways PLC as an Accountant for 1 1/2 years he joined The Finance Company PLC as Mr. Gunawardena is an “Independent” Non Executive the Chief Accountant in the year 1986. Thereafter, in Director. January, 1989 he was appointed as the Finance Manager of Ceylinco Insurance. He was appointed as a Director Mr. P.A. Jayawardena of the Board of Ceylinco Insurance with effect from 01st. - Director / Chief Financial Officer (Life) August, 1990.
Mr. Palitha Jayawardene counts over 25 years of experience in the field of finance. He is a Fellow Member of the Institute of Chartered Accountants of Sri Lanka and of the Institute of the Certified Management Accountants of Sri Lanka. He joined the Life Division of the Company in 1990 as Chief Accountant (Branches) and was invited to the Board in 2005.
He serves as a Director of Ceylinco Healthcare Services Limited as well.
Ceylinco Insurance PLC 92 Annual Report 2011 Mr. D.W.P. Upali His decades of experience in the military and diplomatic - Director / Chief Financial Officer (General) corps, administrative skills, integrity and acumen are an asset to the Board of Ceylinco Insurance PLC. Mr. Upali Witharana joined Ceylinco Insurance PLC as an Assistant General Manager – Finance (General Insurance Division) on 04th. January, 1999. He is a Mr. S.R. Abeynayake Chartered Accountant and is an Associate Member of - Director/Deputy Chief Financial Officer (Life) the Institute of Chartered Accountants of Sri Lanka Mr. Ranga Abeynayake counts fifteen years of experience and a Fellow Member of the Institute of Certified in the field of Finance. He holds a MBA from the Management Accountants of Sri Lanka. He also holds Postgraduate Institute of Management (PIM), University a Master of Business Administration Degree from the of Sri Jayawardenepura. He is also a Fellow Member of University of Colombo. Mr. Witharana has over 30 years the Institute of Chartered Accountants of Sri Lanka and of management experience in the Insurance industry of the Institute of Certified Management Accountants of both in Sri Lanka and overseas. Sri Lanka. He joined the Life Division of the Company in March, 1998 as Financial Accountant and held He is a past Chairman of the Finance Technical Sub- the post of Deputy General Manager (Finance) – Life Committee of the Insurance Association of Sri Lanka Insurance, at the time he was appointed to the Board of (IASL). Ceylinco Insurance PLC from 01st. February, 2011.
Mr. Witharana was appointed to the Board of Ceylinco Insurance PLC on the 25th. of October, 2005. He also serves as the Finance Director/Director in other Associate and Subsidiary Companies of Ceylinco Insurance. In addition to his contribution in the financial management in the Ceylinco Insurance group, he extends his capabilities by leading a team of professionals in the capacity of the CEO to successfully develop and manage a number of hydro power projects within the group.
General C.S. Weerasooriya (Retired) - Director
General C.S. Weerasooriya (Retired) is the fourth ‘Independent’ – Non Executive Director appointed to the Board of Ceylinco Insurance PLC. His appointment was with effect from 02nd. August, 2010.
He received his education at St. Thomas’s College, Mount Lavinia and is a graduate of the Pakistan Military Academy, Kakul and the National Defence College in India. He was appointed Commander of the Sri Lanka Army on 16th. December, 1998 and after an illustrious 35 year military career, was appointed Sri Lanka’s High Commissioner to Pakistan - a position he held for six years. During this period he was also the Ambassador Extraordinary and Plenipotentiary for Sri Lanka to Tajikistan and Kyrgyzstan.
Ceylinco Insurance PLC 93 Annual Report 2011 Corporate Governance
“Good Corporate governance is the glue that holds together responsible business practices, which ensures positive workplace management, marketplace responsibility, environmental stewardship, community engagement and sustained financial performance. This is even more true now as we work worldwide to restore confidence and promote economic growth”
(T. Buchs)
The Board of Directors of Ceylinco Insurance believes that the Board contains a high degree of experience and that sound corporate governance principles are the sound knowledge with regard to the insurance industry. foundation upon which the trusts of all stakeholders Information with respect to each Director has been are built. These Corporate Governance Principles have disclosed together with the disclosure requirements on been approved by the Board. The Boards prime objective pages 86 to 93 of this Annual Report. is to enhance long term shareholder value whilst being committed to uphold the highest standards of integrity, Board Appointments accountability, transparency and business ethics. The Company has established a formal and transparent New understandings of business risk show that Boards procedure for new appointments with identifying have a legal and fiduciary responsibility to manage suitable person, professional qualifications, business environmental, social and governance risks. Board of experience and personal qualities. The Company gets Directors required to the prepared to manage these long prior approval from Insurance Board of Sri Lanka term concerns alongside typical corporate directives. By (IBSL), when appointing new directors to the Board. addressing and managing these risks effectively, Boards All new appointments are communicated to the can position their businesses to perform well financially shareholders via Colombo Stock Exchange. and secure a long term license to operate. Thereby, we in Ceylinco Insurance extending internal controls to Board Functioning encompass a range of ethics and integrity issues. The Company has a policy, that the role of the Chief Executive Officers and the Chairman should be separate. The Report of Corporate Governance Compliance The Non-Executive Chairman preserves order and details the level of adherence to the “Code of Best facilitates the effective discharge of Board functions. Practice on Corporate Governance’ issued jointly by the Institute of Chartered Accountants of Sri Lanka and the Securities and Exchange Commission of Sri Lanka Board Performance published by the Colombo Stock Exchange. The Company does not maintain a formal procedure to evaluate the Board performance, however all Directors Board of Directors dedicate enough time to the affairs of the Company. The Board consists of Sixteen Directors, of four, including the Chairman, function in a Non Executive Board Interaction with Shareholders capacity. The Board performs its supervisory functions The Company is committed to maintain good through the Board Audit Committee, Remuneration relationship with all shareholders. Normal shareholder Committee and Investment Committee. Members relationship is the responsibility of the Company of Professional accounting bodies are on the Board Secretary. ensuring financial acumen and knowledge. In addition to
Ceylinco Insurance PLC 94 Annual Report 2011 Shareholders have the opportunity to meet and question Board Committees the Board of Directors at the Annual General Meeting, (AGM) which will be held on 30th. March, 2012. All The Board has delegated certain responsibilities to the items of business to be considered at the AGM is Board Audit Committee, Remuneration Committee included with the Notice of Meeting, which will be sent and Investment Committee. Details of the Board to shareholders 15 working days prior to the AGM. Committees, including their composition and objectives are given in page 99 to 103. Directors’ Remuneration The Company has established a formal procedure / policy on remuneration for individual Directors. The Remuneration Committee consisting exclusively of Non – Executive Directors and they are making recommendation to the Board within agreed terms of reference. Details of the Remuneration Committee and amount of remuneration paid to Executive and Non Executive Directors are disclosed.
The extent of Company adherence to the rules on Corporate Governance published by the Colombo Stock Exchange is as follows.
Rule No: Rule of Corporate Governance Status of Details Compliance 7.10.1 Two or one third of Directors, Not Complied Five required, among the Board whichever is higher, should be of Directors, only 4 Directors are Non – Executive Directors. Non-Executive Directors. 7.10.2 (a) Two or 1/3 of Non-Executive Complied The Board comprises three Directors appointed to the Board independent Non-Executive of Directors, whichever is higher Directors. shall be “independent”. 7.10.2 (b) Each Non-Executive Director Complied The Non Executive Directors have to submit a declaration of his/ submitted the declaration. her independence or non independence in the prescribed format. 7.10.3 (a) The names of Directors determined Complied Please refer page 6-7 to be independent should be disclosed in the annual report. 7.10.3 (b) In the event a Director does Not applicable No such determination required. not qualify as independent as the criteria set out in corporate governance, but if the Board is of the opinion that the Director is nevertheless independent, that shall specify the criteria not met and basis of the determination in the annual report.
Ceylinco Insurance PLC 95 Annual Report 2011 Corporate Governance
Rule No: Rule of Corporate Governance Status of Details Compliance 7.10.3 (c) A brief resume of each Director Complied Please refer page 89-93 including the areas of expertise should be published in the annual report. 7.10.3 (d) Provide a brief resume of new Complied A brief resume of each such new Director appointments to the appointment has been provided to Board. the CSE as specified 7.10.5 A listed company shall have a Complied Please refer page 100 Remuneration Committee. 7.10.5 (a) The Remuneration Committee Complied The Remuneration Committee shall comprise a minimum of consists of two independent Non two independent Non Executive Executive Directors Directors or Non-Executive Directors majority of whom shall be independent whichever is higher. One Non Executive Director shall Complied Mr. K.I. Dharmawardena functions be appointed as Chairman of the as Chairman of the Remuneration Committee by the Board Committee. 7.10.5 (b) The Remuneration Committee Complied Please Refer Page 100 shall recommend the Remuneration of the Chief Executive Officers and the Executive Directors. 7.10.5 (c) The annual report should set out:
The names of Directors comprising the Remuneration Complied Please refer page 98 Committee
A statement of remuneration Complied Please refer page 100 policy Please refer page 197 The aggregate remuneration paid to Executive and Non Executive Complied Directors. 7.10.6 A listed Company shall have an Complied Please refer page 99 Audit Committee
Ceylinco Insurance PLC 96 Annual Report 2011 Rule No: Rule of Corporate Governance Status of Details Compliance 7.10.6 (a) The Audit Committee shall Complied The Audit Committee consists of comprise a minimum of two two independent Non-Executive independent Non-Executive Directors. Directors or a Non-Executive Directors a majority of whom shall be independent, whichever is higher. One Non-Executive Director shall Complied Mr. D.H.J. Gunawardena functions be appointed as Chairman of the as the Chairman of the Audit Audit Committee by the Board. Committee The Chairman or one member Complied Chairman of the Audit Committee of the committee should be is Fellow Member of the Chartered a member of a recognized Institute of Management professional accounting body. Accountants (UK) The Chief Executive Officers and Complied Please refer Page 99 Chief Financial Officers shall attend Audit Committee meetings 7.10.6 (b) Confirmation of functions of Complied Please refer page 99 the Audit Committee are in accordance with the rules. 7.10.6 (c) The annual report should set out: Complied Please refer page 98
The names of the Directors who comprise the Audit committee The Audit Committee should Complied Please refer page 99 make a determination of the independence of the auditors and shall disclose the basis for such determination. A report by the Audit Committee Complied Please refer page 99 setting out the manner of compliance of the functions during the period.
Ceylinco Insurance PLC 97 Annual Report 2011 Corporate Governance
Details of the Board Committees
Audit Committee Remuneration Committee Chairman Mr. D.H.J. Gunawardena Mr. K.I. Dharmawardena (Non Executive) Members Mr. K.I. Dharmawardena Mr. D.H.J. Gunawardena (Non Executive) Secretary Mrs. T.N. Jasenthuliyana Mrs. T.N. Jasenthuliyana Invitees CEO CEO Director – Finance Director – Finance Chief Financial Officer GM – Finance Head of Internal Audit External Auditors Agenda Available Available Frequency of Meetings Quarterly Bi-annually Professional Advice Available Available Terms of Reference Available Available Objectives Review and make recommendations to the Review and approve remuneration Board for approval of annual accounts of the policy applicable to the employees Company including the quarterly financial of the company in line with the statements industry benchmarks
Review the effectiveness of the risk management Ensure that the company has and internal control processes and make acceptable performance appraisal recommendations for improvement, systems for all employees
Review the compliance with financial reporting Review and recommend to the requirements (SLAS) and other relevant Board the remunerations to be legislation. paid to Directors and Senior Management. Review the corporate compliance with the Regulation of the Insurance Industry Act, Regulation of the Insurance Board of Sri Lanka and other applicable regulations.
Review internal and external audit plans and reports of internal and external auditors and follow up on recommendations
Review the scope of annual audit and its fee with the External Auditors and the Management.
Determine the External Auditors fee and make recommendations to the Board on their appointment and their ceasing to hold office.
Ceylinco Insurance PLC 98 Annual Report 2011 Report of the Board Audit Committee
Committee Composition External Audit The Board Audit Committee consists of two independent The committee discussed with the External Auditors, their Non-Executive Directors with the Company Secretary Audit Plan prior to their commencement of the audit. The acting as its secretary. The Chairman of the committee is a External Auditors were given adequate access to whatever member of a recognized professional accounting body. information they needed for the audit.
The Main role and responsibilities of the Audit The Management Letter issued by the External Auditors for Committee the year ended 31st December 2010 and the management The Audit Committee functions within the Terms of responses thereto, were discussed by the committee and the Reference approved by the Board which sets out the corrective action taken was reviewed. The committee also objectives and responsibilities of the Audit Committee. The reviewed the non-audit services provided by the external main objectives of the committee are; auditors to ensure that their independence and objectivity were safeguarded. a) to assist the Board of Directors in discharging its responsibilities towards all stake holders of the company Statutory and regulatory compliance and ensure that sound Corporate Governance practices A statement reporting the statutory and regulatory are upheld within the Company, compliance of the company, duly certified by the respective b) to oversee the Company’s financial reporting process Head of Internal Audit of the Life and General Divisions, with a view to ensuring the integrity of the information is submitted at each of the Audit Committee meetings. provided to the stakeholders, Instances of non compliance if any, are included in the c) to review the Company’s compliance with statutory and Audit Committee’s reports to the Board of Directors and regulatory requirements, followed up to ensure appropriate corrective action. This d) to review the Company’s Internal Control and Risk procedure ensures that compliance with all statutory and Management mechanisms with a view to ensuring that regulatory requirements are effectively monitored. they are adequate and effective, Conclusion e) to review and approve the Internal Audit Department’s plan of activities, and monitor its execution, Based on the review of reports submitted by the External and Internal Auditors, the information obtained by the f) to approve the remuneration and terms of engagement of Committee and having examined the adequacy and the external auditors. effectiveness of the internal controls which have been designed to provide a reasonable but not an absolute Meetings and Attendance assurance to Directors that the assets of the company The Committee formally met 04 times during the year are safeguarded, the Audit committee is satisfied that the under review. financial position of the company is regularly monitored and that steps are being taken to continuously improve the The attendance of the members at these meetings is control environment maintained within the Company. recorded in page 123 of this Annual Report.
The Head of Finance, Chief Financial Officers, General The Audit Committee having looked into the independence Manager – Finance and the Chief Internal Auditors of and performance of the external auditors Messrs Ernst the two divisions attended these meetings by invitation. & Young, recommend that they be reappointed as the The engagement partner of the Company’s External statutory auditors of the Company for the financial year Auditors also attended one of the meetings by invitation. ending 31st December 2012, subject to the approval of the The proceedings of the Audit Committee are periodically shareholders at the forthcoming Annual General Meeting. reported to the Board of Directors.
Internal Audit The activities of the Internal Audit Department were D.H.J. Gunawardena monitored and reviewed by the Committee at Audit Chairman – Audit Committee Committee Meetings. The Committee also reviewed selected audit reports covering various functions of the 10th. February, 2012 Company and followed up the implementation of audit recommendations confirmed by the committee.
Ceylinco Insurance PLC 99 Annual Report 2011 Report of the Remuneration Committee
The Remuneration Committee consists of two Independent Directors, one of whom functions as the Chairman of the Committee. These two Independent Directors do not hold any executive office in the Company and are free from any business or other relationships which may interfere with their independent judgment. The Chief Executive Officers as well as other key management officials attend Committee meetings by invitation.
During the year the Committee has undertaken a comprehensive review of the remuneration policy of the Company and made several recommendations to the Company. In addition the Committee is in the process of advising the Company on restructuring remuneration packages to attract, motivate and retain talented, high quality individuals capable of meeting the demands and challenges of the rapidly evolving business environment.
The Minutes of the Committee are circulated and affirmed by the Board of Directors. Details of executive remuneration are included under Key Management Personnel Compensation on page 197 of the Annual Report.
K.I. Dharmawardena Chairman – Remuneration Committee
10th. February, 2012
Ceylinco Insurance PLC 100 Annual Report 2011 Investment Committee Report - General
Composition view to further strengthening the Company’s liquidity The Investment Committee was reconstituted during position. the year with increased emphasis on Enterprise Risk s 4HE #OMMITTEE CLOSELY MONITORED EXPOSURE TO Management framework of the Company. A Non- Equity stocks and formulated strategies and provided Executive Director and an independent professional with guidance on converting illiquid and low-yielding expertise in the field of financial management, treasury, equity stocks to liquid and high-yielding assets. investment and risk management were included to s %VALUATED INVESTMENT PROlLES WITH A VIEW TO provide technical input and facilitate efficient decision determine optimum duration of investments. making. The Investment Committee met 05 times during the year and the folllowing Members served in the s 4HE #OMMITTEE ALSO PLACED EMPHASIS ON FURTHER Committee : strengthening the solvency position for General Insurance through the effective management of Mr. Nihal Peiris - Director (Finance) / Head of Finace solvency margins and solvency ratios.. Thus the Mr. D.W.P. Upali - Director / Chief Financial Officer Company has comfortably complied with the (General) Solvency Margins criteria laid down by the Insurance Mr. Herschel Gunawardena - Non Executive Director Board of Sri Lanka, in 2011. Mr. Mangala Boyagoda - Consultant Mr. Nilantha Piyadasa - General Manager - Finance (General)
Terms of Reference
The Committee is responsible to manage the general T.N.M. Peiris investment portfolios consisting of both tangible and Chairman – Investment Committee (General) non tangible assets and to develop portfolio management guidelines as per the Board approved Investment Policy. 10th. February, 2012
The Committee focuses on the following in discharging its responsibilities: s &ORMULATION OF INVESTMENT STRATEGY s !SSET ALLOCATION OF INVESTMENT FUNDS s 2EVIEW FUND PERFORMANCE FOR THE MONTH AND ON A cumulative basis. s -ANAGE RISK EXPOSURE s 2EVIEW COMPLIANCE WITH INTERNAL AND EXTERNAL investment regulations.
Synopsis of Activities s 4HE #OMMITTEE CLOSELY MONITORS MACROECONOMIC factors including market interest rates, liquidity, exchange rates and financial market conditions and makes appropriate changes to the investment strategy and asset allocation strategy when warranted. s $URING THE YEAR THE #OMMITTEE REGULARLY ASSESSED THE asset allocations and formulated strategies to convert illiquid investments into liquid investments with a
Ceylinco Insurance PLC 101 Annual Report 2011 Investment Committee Report - Life
The Investment Committee of Ceylinco Insurance PLC- Scope Life Division is appointed by the Board of Directors The Investment Committee provides a key oversight of the Company. The investment division manages a function with regard to the investment decision-making portfolio valued at Rs. 40 Billion as at 31st. December, process and investment related operations functions of 2011. The portfolio can be regarded as one of the largest the Company. The committee provides guidance to the investment portfolios in Sri Lanka. The portfolio should investment Managers on the investment objectives of be invested according to diverse investment objectives the portfolios and the broad investment strategy to be and varied risk preferences. adopted in investing policy holders’ funds.
As depicted below the investment committee plays a pivotal role in investment decision making process.
Investment Decision Making Process
Level Level Level One Two Three
Investment Company Appraisal IR Act Limits
Investment Determinations Internal Committee
External Solvency Rules Board Approval To enhance limit
Ceylinco Insurance PLC 102 Annual Report 2011 The Committee obtains independent views on the Meetings and Attendance macro and micro economic environment through an The investment committee meeting is convened independent researcher who is a reputed professional weekly chaired by the Managing Director / CEO - in the industry. Investment Committee also seeks expert Life. Management representatives from the areas of opinion / advice for matters within the purview of the Investment, Actuarial, Systems and Marketings are Committee. Valuable opinion / advice from the experts attended at the meetings on the invitation of the will be used in taking right investment decisions. committee.
Objectives
The objectives of the investment committee include:
1. Recommend investment strategies. R. Renganathan 2. Review and update the investment decision making Chairman – Investment Committee (Life) process.
3. Set procedures for the management of investment 10th. February, 2012 portfolios.
4. Set procedures for management of investment related operations.
5. Monitor investment performance.
6. Ensure that the portfolios are managed to achieve their investment objectives whilst maintaining the risk preference.
7. Adhere to the regulatory requirements.
Members
The committee comprises of 5 members of whom 4 are Directors and the company actuary. The company has also invited a veteran from the industry to serve as a consultant and to attend the investment committee meetings. The Investment Committee meetings are scheduled once a week. The meeting will be organized by the investment division officers.
The following members served on the investment committee during the year
1. Mr.R.Renganathan - Managing Director / CEO - Life
2. Mr.E.T.L.Ranasinghe - Director / Deputy CED - Life
3. Mr.P.A.Jayawardena - Director / CFO - Life
4. Mr.S.R. Abeynayake - Director / Dy.CFO - Life
5. Mr.S. Kumarapperuma - AGM – Actuarial & Reinsurance
Ceylinco Insurance PLC 103 Annual Report 2011 Corporate Management - General
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01. Mr. A.R.S. Wijayapura 02. Mr. M. Seneviratne 03. Mr. R.A. Gunathilake 04. Mr. H.D.A.N. Perera General Manager (City) General Manager (Legal) General Manager (Branches) General Manager (Technical)
05. Mr. R.A. Ranasinghe 06. Mr. J.D.S.N. Piyadasa 07. Mr. K.V.D.W. Wijegunaratne 08. Mr. A.M.D. Alagiyawanna General Manager (City) General Manager - Deputy General Manager (Branches) Senior Assistant General Finance (Branches) Manager
09. Mr. H.A.I. Jayawardena 10. Mrs. T.N. Jasenthuliyana 11. Mr. M. Premaratne 12. Mr. N.S. Rajapakse Senior Assistant General Company Secretary / Senior Senior Assistant General Manager Senior Assistant General Manager Assistant General Manager (Financial Services - City) Manager (Marketing)
13. Mr. C.E. Wimalasuriya 14. Mr. D. Munasinghe 15. Mrs. R.M. Abeywardena 16. Mr. A.B. Wijeyatunge Assistant General Manager Assistant General Manager Assistant General Manager (Legal) Assistant General Manager (Technical - Branches) (Marine) (Financial Services - Head Office)
Ceylinco Insurance PLC 104 Annual Report 2011 17 18 19 20
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17. Mr. I.P. Abeywickrama 18. Mr. A.P.R. De Mel 19. Mr. J.A.N.C. Fernando 20. Mr. S.K. Jayasundara Assistant General Manager Assistant General Manager Assistant General Manager Assistant General Manager (Suwa Sampatha) (Risk Management) (Miscellaneous)
21. Mr. B.D.T. Hewagama 22. Mr. A.L.J. Atapattu 23. Mr. S. Thilakeshwaran 24. Mr. R.S. Arulananthan Assistant General Manager Assistant General Manager Assistant General Manager Regional Manager (Metro Outer Region) (Northern Region) (Eastern Region)
25. Mr. V.D.C. Wickramaratne 26. Mr. I.A.K.J.P.K. Illangakoon 27. Mr. R.S. Joseph 28. Mr. P.L.S. Hemantha Regional Manager Regional Manager Regional Manager Regional Manager
29. Mr. H.J.S. Kumara 30. Mr. M.W.T. Pushpakumara 31. Mr. K.J.N. Perera 32. Mr. R.B.R. Wijeratne Acting Regional Manager Regional Manager Regional Manager Acting Regional Manager
Ceylinco Insurance PLC 105 Annual Report 2011 Corporate Management - Life
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01. Mr. P.A.J. Jayawardena 02. Mrs. R.M.U.K. Ratnayake 03. Mr. A.H.R. Udayasiri 04. Mr. L.A.H.D. Abeywickrama Deputy General Manager Deputy General Manageress Senior Assistant General Manager Senior Assistant General Manager (Business Development) - Information & Communication (Business Development) (Business Development) Technology
05. Mr. T.N.Y. Morseth 06. Mr. E.R.S.S. Hemachandra 07. Mr. J.P. Abhayaratne 08. Mrs. I.A. De Mel Senior Assistant General Senior Assistant General Senior Assistant General Manager Assistant General Manageress Manager - (Training) Manager - (Marketing) (Operations) (Administrative Services)
09. Mr. M. Thenuwara 10. Mr. G.A.D.L. Nayanappriya 11. Mr. A.C.S. Munaweera 12. Mr. P.P.D.V. Hemakumara Assistant General Manager Assistant General Manager Assistant General Manager Assistant General Manager (Business Development) (Internal Audit) (Sales Administration) (Information System Audit & Information Systems Security)
13. Mr. W.A.W.C. Wijesinghe 14. Mr. S. Kumarapperuma 15. Mr. T.D. De Silva 16. Mr. A. Sirisena Assistant General Manager Assistant General Manager Assistant General Manager Assistant General Manager (Business Development) (Actuarial and Reinsurance) (Projects) (Technical)
17. Mr. C.B. Herath Assistant General Manager (ICT)/Deputy Chief Information Officer
Ceylinco Insurance PLC 106 Annual Report 2011 18 19 20 21
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18. Mr. W.R.M. Wickramasinghe 19. Mrs. D.J.K. Vithanage 20. Mr. H.A.H.E. Gunawardena 21. Mr. M.H. Usoof Chief Legal Officer/ Senior Manageress Senior Manager (Training) Senior Manager (Finance) Senior Manager (Customer Services)
22. Mr. L.V. Keragala 23. Mr. C.S. Dias 24. Mr. J.S. Karunaratne 25. Mr. M.S.J.L.B. Weerakoon Senior Manager Consultant Consultant Senior Manager (Customer Relations) (Business Development)
26. Mr. R.M.P. Bandara 27. Mr. H.A. Suraweera 28. Mr. D.D.S. Dissanayake 29. Mr. T. Vijayanath Senior Manager Senior Manager Senior Manager (Projects) Senior Manager (Business Development) (Events & Promotions) (Busines Development)
30. Mr. I.M.A. Dayanatha 31. Mr. B.S.E.M Perera 32. Mr. N.K. Rajapakse 33. Miss. S.K. Gunatilleke Senior Manager Senior Manager Senior Manager Senior Manageress (Actuarial) (Human Resources) (Customer Services) (I.T. Operations)
Ceylinco Insurance PLC 107 Annual Report 2011 Senior Sales Management - General
Corporate Sales Management
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01. Mr. H.C.S. Hemantha 02. Mr. L.M.M.B. Karaliyadde 03. Mr. S.A. Priyantha 04. Mr. W.M.A.C. Sanjana Senior Manager Senior Manager Senior Manager Senior Manager (Corporate Accounts) (Corporate Accounts) (Corporate Accounts) (Corporate Accounts)
05. Mr. V.S.D. De Mel 06. Mr. W.P.N. De Alwis 07. Mr. U. Manukularatne 08. Mr. M.A.S. Rupathunga Senior Manager Senior Manager Senior Manager Senior Manager (Corporate Accounts) (Corporate Accounts) (Corporate Accounts) (Corporate Accounts)
09. Mr. K. Alikhan 10. Mr. U.A.R. Sanjeewa 11. Mr. B.D.C. Perera 12. Mr. M.A.V. Priyadarshana Senior Manager Senior Manager Senior Manager Senior Manager (Corporate Accounts) (Corporate Accounts) (Corporate Accounts) (Corporate Accounts)
13. Mr. M.D.S.R.L. Jayasekara 14. Mr. L.M.R.S. Lansakara 15. Mr. I.K. Weerakkody 16. Mr. W. George Senior Manager Senior Manager Senior Manager Senior Manager (Corporate Accounts) (Corporate Accounts) (Corporate Accounts) (Corporate Accounts)
17. Mr. K.K.V.K. Priyasad Senior Manager (Corporate Accounts)
Ceylinco Insurance PLC 108 Annual Report 2011 Regional / Area Sales Managers
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01. Mr. S.K. De Alwis 02. Mr. R. Seneviratne 03. Mr. E.C.I. Fernando 04. Mr. M.D.N. De S. Amarasekara Regional Sales Manager Area Sales Manager Area Sales Manager Area Sales Manager
05. Mr. B.N.T. Rupasinghe 06. Mr. C.N. Weerasuriya 07. Mr. K.P.L.A. Balawardena 08. Mr. D.S. Karunaratne Area Sales Manager Area Sales Manager Area Sales Manager Area Sales Manager
09. Mr. W.P.S Premachandra 10. Mr. M.A.L. Ravindra 11. Mr. J.S. Rajapaksha 12. Mr. V. Nissanka Area Sales Manager Area Sales Manager Area Sales Manager Area Sales Manager
Ceylinco Insurance PLC 109 Annual Report 2011 Management Staff - Life
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01. Mr. T. Thiyagarajah 02. Mr. J.L.N. Jayawardena 03. Mr. A.S. Hettikanda 04. Mr. B.A. Nandalal Manager (Life Operations) Manager (Operations) Manager (Claims) Manager (Business Development)
05. Mr. D.S. Thilakarathne 06. Mr. W.G.S. Chandrasiri 07. Mr. E.R. Kannangara 08. Mr. N.D. Kurukulasuriya Manager Manager Manager (IT Projects) Manager (Portfolio) (Business Development) (Business Development)
09. Mr. A.A.U.C. Adikari 10. Mr. G.A.H. Chandana 11. Mr. R.M.S. Wijeyesekera 12. Mr. R.S. Deheragoda Category Manager Financial Accountant Manager (Systems) Manager (Business Intelligence)
13. Mr. R.D. Vipulatheja 14. Mr. V.M.G. Kariyawasam 15. Mr. L.G.H.A. Saman Kumara 16. Mr. C.R.P. Liyanage Manager (Training) Manager Manager (Technical) Manager (DB Infrastructure Solutions) (Group Assurance)
17. Mr. W.K.I.S Perera 18. Mr. P.A.C.D. Wijayasekara Manager (Actuarial) Manager (Internal Audit)
Ceylinco Insurance PLC 110 Annual Report 2011 Senior Sales Management - Life
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20. Mr. P.M.J.S.K. Rathnayaka 21. Mr. R.K.A Gunawardena 22. Mr. M.H.Y.A. Silva 23. Mr. K. Sumanthiran Assistant Manager Assistant Manager Assistant Manager Assistant Manager (Business Development) (Business Development) (Business Development) (Business Development)
24. Mr. N.K. Subapanditha 25. Mr. P.P. Sri Kalyaniwansa 26. Mr. K.L.U Priyantha Acting Assistant Manager Acting Assistant Manager Acting Assistant Manager (Business Development) (Business Development) (Business Development)
Ceylinco Insurance PLC 111 Annual Report 2011 Management Staff
HEAD OFFICE – INFORMATION TECHNOLOGY REINSURANCE LIFE & GENERAL DIVISIONS Manager - IT (Branch Operations) Senior Manager S.L.D.C. Sisira B.Com. (Hons.) Assistant General Manager D.P. Ratnapala Mrs. T.N. Jasenthuliyana F.C.I.S.(U.K.), F.C.P.M., F.C.C.S. Manager (Systems) FINANCE H.A. Dikkumbura Chief Manager (Financial Services) Assistant General Manager K. Sankaramoorthy A.C.A., (Financial Services - H.O.) Manager - IT A.S.C.M.A., M.B.A. (Sri J.) A.B. Wijayatunga M.C.P.M. (Business Intelligence) H.A.R. Dharmaratne B.I.T., Managers (Financial Services) Dip. Comp. System Design Mrs. S.H.S.D. Sumanathilake COMPANY SECRETARIAL A.C.A., A.C.M.A. RISK ENGINEERING N. Srinamasivayam Manager (Company Secretarial) V.S. Warnapura Mrs. A.L.D.E.H. De Silva Assistant General Manager (Risk Management) A.K.M. Wickramasinghe B.B. Mgt. (Sp.) (Hons.) A.P.R. De Mel A.M.I. Mech. E.
Senior Risk Engineers TRAINING GENERAL DIVISION B.G.N.I.B. Basnayake B.Sc.(Eng.) Manager (Training) C.C. Ekanayake B.Sc., W.A.M. Susantha B.Sc. TECHNICAL M.I.E.E. (U.K.), A.M.I.E. (S.L.) (Bus. Admin.)(Sp.), M.S.L.I.T.A.D., M.I.T.D. (S.L.) General Manager (Technical) L.K. Karunaratne H.D.A.N. Perera E.M.N. Lasantha B.Sc. (Eng.) GENERAL DIVISION - M.N. Ranasinghe B.Sc.(Eng.) LEGAL City Office R.K. Wijeyasinghe B.Sc. (Eng.), General Manager (Legal) A.M.I.E. (S.L.), PG. Dip. General Manager (City) M. Seneviratne LL.B.(Sri Lanka) & Elect. Eng.(S.L.) R.A. Ranasinghe Attorney-at-Law Risk Engineers General Manager (City) Assistant General Manager (Legal) M.P.P.U. Chulasiri B.Sc.(Eng.), A.R.S. Wijayapura Mrs. R.M. Abeywardena A.M.I.E. (S.L.) Attorney-at-Law & Notary Public H.M.A.D. Herath Senior Assistant General Manager A.M.D. Alagiyawanna Senior Legal Officers N.S. Kaluthantrige B.Sc. (Eng.) B.A.(Econ.)(Hons.) S.T. Lamabadusuriya LL.B., J.A.T.I. Perera N.D.T. (Mech.Eng.) Attorney-at-Law & Notary Public, R.P.D.K. Surangika B.Sc. (Eng.) Senior Assistant General Manager Commissioner for Oath, (Financial Services - City Office) Regd. Co.Sec. N.S. Weerakoon M. Premaratne A.C.A., F.C.M.A. L.P.C. Madhavila INTERNAL AUDIT Attorney-at-Law & Notary Public, Senior Manager (Financial Services) Commissioner for Oath Chief Manager (Internal Audit) M.S.R. Piumwardena A.A.U.S.S. Wijeratne A.C.A., A.C.M.A. PRODUCT DEVELOPMENT Senior Managers (Corporate Accounts) Senior Assistant General Manager Chief Manager (Financial Services) K. Alikhan (Marketing) J. Rambukkana B.Com. (Special) W.P.N. De Alwis N.S. Rajapakse Dip.M.(U.K.), V.S.D. De Mel M.C.P.M. Managers (Internal Audit) W. George J.M.A.R.P. Jayakody H.C.S. Hemantha Senior Product Managers B. Sc.(Busi. Admin.)(Special) M.D.S.R.L. Jayasekara I.E. Abeyratne M.C.I.M. (U.K.), J.A.A.K. Jayasinghe B.Com.(Special), L.M.M.B. Karaliyadde Dip.M. (U.K.), M.B.A. (U.K.), A.C.I.C., M.A.A.T. L.M.R.S. Lansakara Chartered Marketer (U.K.), P.U.U. Perera B.Com. U. Manukularatne M.S.L.I.M., P. Mkt. (S.L.) B.D.C. Perera M.W.R. Wijenaike Dip.M.(U.K.) Manager (Information Systems Audit) S.A. Priyantha K.N.N. Madarasinghe M.A.V. Priyadarshana
Ceylinco Insurance PLC 112 Annual Report 2011 K.K.V.K. Priyasad MARINE DEPARTMENT MOTOR DEPARTMENT M.A.S. Rupathunga Assistant General Manager Senior Assistant General Manager W.M.A.C. Sanjana (Marine Insurance) H.A.I. Jayawardena U.A.R. Sanjeewa D. Munasinghe I.K. Weerakkody Assistant General Manager J.A.N.C. Fernando M.B.A. (India) Managers (Financial Services) Senior Technical Manageress Miss. P. Dambegoda P.F.R. Fernando Senior Manager B.C.P. Kumara P.J.K. Perera W.A. Soysa Senior Manager M.S. Amit Senior Technical Manager Manager (Customer Care) B.K.P. Prashantha B.Sc. HRM (Sri J.) W.R.R.A. Perera Manager (Recoveries) S.F.F. De Silva Technical Manager (Underwriting) FIRE DEPARTMENT W.A.S. Perera Technical Manager (Underwriting) Senior Manager W.R.S. Fernando J.R. Amarasinghe Senior Sales Managers H.B.N. Bandara Senior Technical Manager (Underwriting) Senior Sales Manager D.J. Gunawardena Dip. M. (U.K.), B.I.U. Kumara T.M.R.K. Kurukula A.C.I.M. (U.K.) S.M.A. Kumara Technical Manageress (Claims) Sales Managers G.W.W. Nishantha Mrs. T.K.K. Ratnayake A.K.N. Chandima W.A.S. Prasanna N.J. Thavachchelvam W.M.J. Weerasekara Senior Sales Manager Sales Managers K. Kularajasekaran MARINE SURVEY DEPARTMENT S. De Alwis Senior Manager (Marine Survey) J.K.C. Jayawardena Sales Managers T.A. Wickramaratne H.G.N.L. Ariyaratne Manager (Financial Services) M.D.D. Dissantha MISCELLANEOUS DEPARTMENT K.L.R.D. Silva B.G.S. Mendis S.D.S. Peter Assistant General Manager SUWA SAMPATHA R.V.N.S. Rajapaksha (Miscellaneous Insurance) DEPARTMENT V. Sivakumar S.K. Jayasundara Assistant General Manager (Suwa Sampatha Insurance) MARKETING DEPARTMENT Senior Manager I.P. Abeywickrama A.P. Opatha Senior Sales Managers Miss. K.A.D. De Silva Senior Technical Manageress Senior Technical Manager M.C.A. Fernando Mrs. N.D.D.J. Serasinghe M.D.R.D. Gunatillake S.A.D.L. Sural Senior Manager Technical Manager (Underwriting) B.A., LL.B., Sales Managers T.D. Athapaththu K.M.C.S. Perera Attorney-at-Law, PG. Dip. P. Jayasinghe (Dev. St. & Pub. Policy) K.M.S.N. Kumara Technical Manager (Claims) T.S.R. Peiris J.K. Wanigathunga Technical Manager (Underwriting) R.U. Sampath B.Sc. (Mkt. Mgt.)(Special), V.A.L.C. De Silva K.S. Sanjeewa A.M.S.L.I.M., L.I.I.I. R.T.D.W. Tilakaratne Senior Sales Manager Senior Sales Managers S.U. Thalakumbura TITLE INSURANCE W.M.C.J. Bandara DEPARTMENT N. Hettiarachchi Senior Legal Officers M.A.S. Priyadarshana S.A.K. Haputhantri Attorney-at-Law, Commissioner for Oath Sales Managers T.D. Gamagedara Mrs. H.M. Pethiyagoda LL.B., M.M. Sanoon Attorney-at-Law & Notary Public, Commissioner for Oath
Ceylinco Insurance PLC 113 Annual Report 2011 Management Staff
INTEGRATED BUSINESS Regional Sales Manager Branch Managers SOLUTIONS DEPARTMENT S.K. De Alwis D.A.S. De Silva M.P.S. Divithurugama Senior Manager Chief Manager (Financial Services) C.S.A. Ferdinands P.C.N. Dias U.K.U. Wijeratne D.S.R. Dissanayake Sales Managers L.P.D. Dharmasuriya M.V.N. Fernando Chief Technical Manager V.K. Gunathilake E.R.K. Sirisena (Automobile) L.A.I.A. Jayasena NERVE CENTRE A.R. Pietersz H.D. Madugoda (NON MOTOR) H.P.V.U. Mahindaratne Senior Managers (Financial Services) B.P.J. Mendis Technical Manager O.B.R. Perera U.L.M.C. Perera C.J. Mapalagama A.S. Sarathchandran K.M.R. Ranasinghe P.S.M. Rerukana Technical Manager (Claims) Senior Technical Managers P.L.N.C. Sampath I.M. Karunasena M.M.D. Dias C.J. Udugala A.A. Nandana N.P. Wadugodapitiya GENERAL DIVISION - Branches W.K. Wijeratne Senior Technical Manager (Automobile) Acting Branch Manager General Manager (Branches) B.S.B. Jayasekara M.S. Weerasinghe R.A. Gunathilake Sales Managers Technical Managers General Manager – Finance (Branches) K.A.A.P. Abhaya Wickrama R.T. Hemage B.Sc. (Agriculture) J.D.S.N. Piyadasa A.M.W.J. Adikari B.Sc. (Pub. Admin.)(Hons.), A.C.A. H.M.T. Herath P.G.N.S. Amarakoon B.Sc. (Mkt. Mgt.) (Special) A.D.W.I. Anushan Deputy General Manager (Branches) R.P.D.U. Indrajith T. Athithan K.V.D.W. Wijegunaratne K.W.M.A. Kulatunga K.M.U. Chandraratne W.P.G.D. De Silva Assistant General Manager Technical Managers (Automobile) L.H.M.L. Dayananda (Technical - Branches) D.B. Rajaguru D.M.M. Deshapriya C.E. Wimalasuriya A.C.I.C. S.H. Sanath B.Sc. (Eng.) D.M.R.N. Dissanayake D.H.M.J. Dharmapriya Assistant General Manager Managers (Financial Services) K.C.S. Fernando (Northern Region) B.S. Baddage A.C.A., M.S.R.M. Fernnado A.L.J. Atapattu A.C.I.C B.Sc. (Accountancy)(Special) B.R. De S. Gardiyawasam R.M.A. Bandara W.G.S.L. Gamage Assistant General Manager B.Sc. (Busi. Admin.)(Special) S.K.K. Gunarathna (Metro Outer Region) W.P.A. Bandara D.P.R. Gunasiri B.D.T. Hewagama A.C.I.C. D.R.N. Damsiri S. Gurusinghe B.Sc. (Busi. Admin.) (Special) I.G.D. Idirideera Assistant General Manager S.L.W. Fernando N. Jayakumar (Eastern Region) Mrs. W.P.S. Jayasinghe S.P. Jagathsiri S. Thilakeshwaran B.Sc .(Busi. Admin.)(Special) W.S.A. Kumarasiri D.D.S.S. Kumara Area Sales Managers Regional Managers P.V. Kumara M.D.N. De S. Amarasekera R.S. Arulananthan C.S. Mahalekamgedara K.P.L.A. Balawardena P.L.S. Hemantha D.S. Manik Kadawara E.C.I. Fernando I.A.K.J.P.K. Illangakoon W.M.R.B. Naranpanawa D.S. Karunaratne R.S. Joseph P.W.H.M. Panwilawaththa V. Nissanka K.J.N. Perera P. Partheepan W.P.S. Pemachandra M.W.T. Pushpakumara D.S.R. Perera J.S. Rajapakse V.D.C. Wickramaratne L.T.P. Perera M.A.L. Ravindra D.B.J. Prasad B.N.T. Rupasinghe Acting Regional Managers C. Pratheepan R. Seneviratne H.J.S. Kumara B.A.S. Priyadarshana C.N. Weerasuriya R.B.R. Wijeratne A.C.I.C. H.K.M. Priyankara
Ceylinco Insurance PLC 114 Annual Report 2011 H.M.N.T. Ranathunga R.P.S.R. Randunu W.A.D.S.A. Rodrigo K.M.P. Rohan J.E. Rulach K. Sakthivadivel S.J.S. Silva W.D. Silva S.T. Somathilaka M.H.C.K. Sujith A.V. Upul C.H. Vitharana D.S.P. Weerasinghe W.A.C.R. Weerasinghe W.L.D.K. Weerasuriya
Sales Manager (Personal Products) P.J. Raweendra
Acting Sales Manager J.M.R.K.D. Galgamuwa
Ceylinco Insurance PLC 115 Annual Report 2011 Management Staff
LIFE DIVISION Assistant General Manager Senior Managers (Business (Information Systems Audit & Development) Information Systems Security) R.M.P. Bandara LUTCF (U.S.A.) Deputy General Manager P.P.D.V. Hemakumara C.I.S.A. T. Vijayanath (Business Development) (U.S.A.), M.B.C.S. (U.K.), M.S.J.L.B. Weerakoon P.A.J. Jayawardena LUTCF (U.S.A.), Dip. Mgt. (India), M.B.A. (India), C.I.A.M. M.C.S.S.L.(S.L. ) Senior Manager (Events & Deputy General Manageress Promotions) Assistant General Manager (Information & Communication H.A. Suraweera (Actuarial & Reinsurance) Technology) B.Sc. (Mkt. Mgt.) (Special), S. Kumarapperuma B.Sc. (Hons.), Chartered Marketer Mrs. R.M.U.K. Ratnayake PG. Dip. Act. Sci. (U.K.), M.C.P.M., M.B.C.S., C.I.T.P., C.I.S.A.(U.S.A.), M.B.A. (University of Colombo) M.Sc. (Comp.Sc.)(Colombo), M.C.S. Senior Manager (Projects) D.D.S. Dissanayake Bsc. (Eng.), Assistant General Manager (Projects) Attorney-at-Law Senior Assistant General Managers T.D. De Silva B.B.A. (Hons.), A.C.C.A. (Business Development) M.B.A. (University of Colombo) Senior Manager (Human Resources) L.A.H.D. Abeywickrama I.M.A. Dayanatha M.B.C.S., C.I.T.P., LUTCF (U.S.A.), C.I.A.M. Assistant General Manager M.A.C.S., M.C.P.M., M.B.A. (Sri J.), A.H.R. Udayasiri B.Sc. (Cey.), (Technical) A.C.I.P.D., A.I.P.M. (S.L.) LUTCF (U.S.A.), C.I.A.M. A. Sirisena A.C.I.I. (Lond.) D.M.U. (A.M.S.), Chartered Insurer, Senior Manager (Customer Services) M.B.A. (India) Senior Assistant General Manager B.S.E.M. Perera Training) Assistant General Manager (ICT) / Senior Manager (IT Operations) T.N.Y. Morseth C.I.A.M., Deputy Chief Information Officer N.K. Rajapakse M.B.C.S., C.I.T.P. LUTCF (U.S.A.) C.B. Herath B.Sc., M.B.A. (Sri J.), M.B.C.S., PG. Dip. Senior Manageress (Actuarial) Senior Assistant General Manager (Bus. & Fin. Admin.) Miss. S.K. Gunatilleke (Marketing) B.Sc. (Hons.) Maths (U.K.), E.R.S.S. Hemachandra Chief Legal Officer / Senior Manager PG. Dip. Actuarial Science (U.K.), M.B.A. (Aust.), Dip. Mkt. (U.K.), W.R.M. Wickramasinghe M.C.P.M., M. Sc. (Actuarial Science)(U.K.), F.C.I.M. (U.K.), Chartered Marketer, Attorney-at-Law & Notary A.I.A. (U.K.) LUTCF (U.S.A.), Public, Commissioner for Oath, Regd. Co. Sec. Manager (Training) Senior Assistant General Manager R.D. Vipulatheja A.F.A., LUTCF (U.S.A.) (Operations) Senior Manageress (Customer J.P. Abhayaratne Dip. Mgt., Services) Managers (Business Development) B.B.A. (U.S.A), M.B.A. (U.K.) Mrs. D.J.K. Vithanage W.G.S. Chandrasiri B.A. Nandalal Assistant General Manageress Senior Manager (Training) D.S. Thilakarathna (Administrative Services) H.A.H.E. Gunawardena C.I.A.M., Mrs. I.A. De Mel LUTCF (U.S.A.) Manager (Life Operations) T. Thiyagarajah B.Sc.(Hons.) Assistant General Managers Senior Manager (Finance) (Business Development) M.H. Usoof B.Com., A.C.A. Manager (Operations) M. Thenuwara LUTCF (U.S.A.), J.L.N. Jayawardena C.I.A.M. Senior Manager (Customer Relations) W.A.W.C. Wijesinghe L.V. Keragala Dip. Mkt. (U.K.) Category Manager LUTCF (U.S.A.), C.I.A.M A.A.U.C. Adikari M.C.I.M. (U.K.), Consultants Chartered Marketer (U.K.), Assistant General Manager C.S. Dias LUTCF (U.S.A.) M.S.L.I.M. (S.L.), P. Mkt. (S.L.) (Internal Audit) J.S. Karunaratne A.C.I.I., G.A.D.L. Nayanappriya A.C.A. Chartered Insurer Manager (Claims) A.S. Hettikanda ANZIIF (Snr. Assistant General Manager Associate), Cert. C.I.I. (U.K.) (Sales Administration) A.C.S. Munaweera LUTCF (U.S.A.), C.I.A.M.
Ceylinco Insurance PLC 116 Annual Report 2011 Manager (Portfolio) LIFE DIVISION - Branches N.D. Kurukulasuriya A.C.M.A.(U.K.), Regional Sales Manager C.P.A., A.C.M.A., M.C.P.M., A.K.D.D.C. Perera M.B.A. (Sri J.) Senior Branch Sales Managers Manager (IT Projects) P.V. Abayaratne E.R. Kannangara M.I.D.P.M. (U.K.), M.N. Abdeen M.B.C.S., C.I.T.P., M.Sc. (I.T.), M.C.S. D.R.M.T.N.D. Bandara D.S. Hettiarachchi Manager (Systems) S.N. Hettiarachchi R.M.S. Wijeyesekera M.B.A. (India), B.C.S. (U.K.) Y.C. Liyanage K.H.E. Perera Manager (Corporate Sales) N. Pushpaharan M. Priyaviraj W.H. Sarathchandra N.T. Seneviratne Financial Accountant G.A.H. Chandana Senior Manageress – Corporate Sales B.Sc. Mgt. (Sp.) (Hons.), A.C.A., (Ceylinco Seraka Ltd.) A.C.M.A. Mrs. R.S. Panagoda M.F.A. (Limra -U.K.) Manager (Business Intelligence) R.S. Deheragoda
Manager (Group Assurance) C.R.P. Liyanage Dip. M. (U.K.), B.B.D.M. (Aus.), M.B.A. (Aus.)
Manager (Technical) L.G.H.A. Saman Kumara A.C.I.I., A.I.I.I., L.L.B., Attorney-at-Law
Manager (Actuarial) W.K.I.S. Perera A.S.A.
Manager (Internal Audit) P.A.C.D. Wijayasekera A.C.A., A.C.M.A., F.M.A.A.T.
Manager (DB Infrastructure Solutions) V.M.G. Kariyawasam M.Sc. (I.T.)
Assistant Managers (Business Development) R.K.A. Gunawardena P.M.J.S.K. Ratnayake M.H.Y.A. Silva K. Sumanthiran
Acting Assistant Managers (Business Development) K.L.U. Priyantha P.P. Sri Kalyaniwansa N.K. Subapanditha
Ceylinco Insurance PLC 117 Annual Report 2011
Financial Information
Financial Calendar 2012
Annual Report 2011 28th. February, 2012 Annual General Meeting 03rd. April, 2012 Final Dividend Proposed 03rd. April, 2012 Ex-Dividend From 04th. April, 2012 Final Dividend Payable 11th. April, 2012 Interim Report - 1st. Quarter 15th. May, 2012 Interim Report - 2nd. Quarter 15th. August, 2012 Interim Report - 3rd. Quarter 15th. November, 2012 Interim Report - 4th. Quarter 28th. February, 2013 Financial Statements
Report of the Directors 121-128 Industry Segment Data -
Statement of Directors’ Responsibility 129 Statement of Income 2011 140
Actuarial Report (General) 130 Industry Segment Data - Statement of Income 2010 141 Actuarial Report (Life) 131 Industry Segment Data - Report of the Auditors 132 Cash Flow Statement 2011 142 Balance Sheet 133 Industry Segment Data - Income Statement 134 Cash Flow Statement 2010 143
Statement of Changes in Equity 135 Supplementary Balance Sheet - Life 144
Cash Flow Statement 136 Notes to the Supplementary Balance Sheet - Life 145-151
Insurance Revenue Account 137 Notes to the Financial Statements 152-201 Industry Segment Data - Balance Sheet 2011 138
Industry Segment Data - Balance Sheet 2010 139
Ceylinco Insurance PLC 120 Annual Report 2011 Report of the Directors
The Directors are pleased to submit their report together with the Audited Statements of Income, Changes in Equity, Cash Flow and the Balance Sheet of Ceylinco Insurance Group for the year ended 31st. December, 2011, and the Report of the Auditors thereon.
Review of Operations The Chairman’s and the Joint Managing Directors’ Reviews of General and Life Divisions on Pages 12 to 29 contain a detailed description of General and Life Insurance operations carried out in the year under review and projected developments.
Principal Activities of the Group The principal activities of the Group constitute underwriting all classes of General Insurance, Life Insurance, Management of Investment, Health Care Operations, Education and Power Generations.
Results of the Financial Year Group Company 2011 2010 2011 2010 Rs.‘000 Rs.‘000 Rs.‘000 Rs.‘000
Profit After Taxation (After Minority Interest) 1,372,169 961,639 1,129,331 803,287 Add: Balance Brought Forward 3,493,254 2 ,663,687 3,397,454 2,726,239 Consolidation Adjustments 132,326 - - - Adjustment due to structural reorganisation 53,012 - - - Funds available for appropriation 5,050,761 3,625,326 4,526,785 3,529,526 Appropriation : Dividend Paid - Final (145,280) (132,072) (145,280) (132,072) Unappropriated Profit Carried Forward 4,905,481 3,493,254 4,381,505 3,397,454
Transfer to Reserves and Provisions There were no transfers other than those mentioned above to or from reserves or provisions except for normal amounts set aside for items such as depreciation, outstanding claims and unexpired risks as shown in the accounts.
Share Capital During the Financial Year under review, no shares were issued.
The Stated Capital of the Company as at 31st. December, 2011 was Rs. 1,324,822,000/= and is represented by issued and fully paid 20,000,000 voting ordinary shares and 6,414,480 non voting ordinary shares.
Dividends The Directors recommend a first and final dividend of Rs. 6/50 per share for the year ended 31st. December, 2011, payable on 11th. April, 2012.
Directors Messers. J.G.P. Perera, A.R. Gunawardena, R. Renganathan, H.D.K.P. Alwis, E.T.L. Ranasinghe, W.C.J. Alwis, P.D.M. Cooray, K.I. Dharmawardena, P.M.B. Fernando, D.H.J. Gunawardena, P.A. Jayawardena, N.D. Nugawela, T.N.M. Peiris, D.W.P. Upali and Gen. Chandrika Sirilal Weerasooriya (Retired) were the Directors of the Company during the financial year ended 31st. December, 2011.
Ceylinco Insurance PLC 121 Annual Report 2011 Report of the Directors
Mr. Sri Ranga Abeynayake was also a Director partly during the financial year ended 31st. December, 2011 having been appointed with effect from 01st. February, 2011.
In accordance with the Articles of Association of the Company, Messrs. K.I. Dharmawardena, P.M.B. Fernando, N.D. Nugawela and T.N.M. Peiris retire by rotation and being eligible, offer themselves for re-election.
An Ordinary Resolution was approved by the Shareholders at the last Annual General Meeting of the Company held on 04th. May, 2011 for the election of Mr. Juvanel Godwin Peter Perera as a Director being over 70 years, wherein the age limit specified in Section 210 of the Companies Act No. 07 of 2007 will not apply. Mr. Perera’s appointment will be valid for one year from his appointed date.
In accordance with the Companies Act No. 07 of 2007, Mr. J.G.P. Perera has to retire thereafter and being eligible offers himself for re-election. Mr. Perera being a Director was 74 years of age in December, 2011, a Special Notice has been received from a shareholder to move a resolution as an ordinary resolution that Mr. Juvanel Godwin Peter Perera be re- elected as a Director and that the age limit specified in Section 210 of the Companies Act No. 07 of 2007 shall not apply to Mr. Juvanel Godwin Peter Perera.
Directors’ Meetings The number of Board Meetings held during the financial year under review were seven meetings and the number of meetings attended by each Director of the Company were as follows :
Names of Directors No. of Board Names of Directors No. of Board Meetings attended Meetings attended
Mr. J.G.P. Perera 07 Directors appointed during the year Mr. A.R. Gunawardena 07 Mr. S.R. Abeynayake 06 Mr. R. Renganathan 07 Mr. H.D.K.P. Alwis 07 Mr. E.T.L. Ranasinghe 07 Mr. W.C.J. Alwis 05 Mr. P.D.M. Cooray 07 Mr. K.I. Dharmawardena 07 Mr. P.M.B. Fernando 07 Mr. D.H.J. Gunawardena 07 Mr. P.A. Jayawardena 07 Mr. N.D. Nugawela 07 Mr. T.N.M. Peiris 07 Mr. D.W.P. Upali 07 Gen. C.S. Weerasooriya (Retd.) 06
Directors’ Interest in Shares The Memorandum and Articles of Association of the Company do not stipulate the Directors to hold shares of the Company, as qualifying shares.
Ceylinco Insurance PLC 122 Annual Report 2011 Directors’ Interest in Shares of the Company are as follows: Voting Shares Non Voting Shares as at as at as at as at 31.12.2011 31.12.2010 31.12.2011 31.12.2010 Mr. J.G.P. Perera NIL NIL NIL NIL Mr. A.R. Gunawardena (Mr. A.R. Gunawardena 130 voting shares and 55 non voting shares; and joint with Mrs. K.S. Gunawardena 119,359 voting shares and 8,600 non voting shares) 119,489 119,489 8,655 8,655 Mr. R. Renganathan (Mr. R. Renganathan 121,124 voting shares and joint with Mrs. T.R.S. Renganathan 3,626 voting shares) 124,750 124,750 NIL NIL Mr. H.D.K.P. Alwis 861 861 Mr. H.D.K.P. Alwis joint with Mrs. S.R. Alwis 2,000 2,000 Mr. E.T.L. Ranasinghe 7,098 7,098 NIL NIL Mr. W.C.J. Alwis 526,692 526,692 219,041 219,041 Mr. P.D.M. Cooray 6,050 6,050 NIL 1,000 Mr. K.I. Dharmawardena 28 328 NIL NIL Waldock Mackenzie Limited/Mr. K.I. Dharmawardena 16,536 22,136 NIL NIL Mr. P.M.B. Fernando 500 500 1,000 1,000 Mr. D.H.J. Gunawardena NIL NIL NIL NIL Mr. P.A. Jayawardena 1,316 1,316 134 134 Mr. N.D. Nugawela 1,200 1,200 510 510 Mr. T.N.M. Peiris 22,492 22,492 2,000 2,000 Mr. D.W.P. Upali 500 500 512 512 Gen. C.S. Weerasooriya (Retd.) NIL NIL NIL NIL Mr. S.R. Abeynayake 7,858 7,858 200 200
The Directors’ dealings of the Shares of the Company are in line with the regulations of the Colombo Stock Exchange and in keeping with the regulations of the Company.
Directors’ Interest in Contracts The Directors of the Company have no direct or indirect interest in any contract or proposed contract with the Company except those specified in the annexed schedule, which have been disclosed and declared at meetings of Directors.
Corporate Governance The Audit Committee held five meetings and the Remuneration Committee held two meetings during the year 2011. The number of meetings attended by each Director (who are members of the respective committees) are as follows:
Name of Committee Member Audit Remuneration Committee Committee
Mr. D.H.J. Gunawardena 05 02 Mr. K.I. Dharmawardena 03 02 Mr. T.N.M. Peiris 05 02 Mr. P.A. Jayawardena 04 Non Member Mr. D.W.P. Upali 03 Non Member
The three Non Executive “independent” Directors have duly submitted to the Board their declarations as to their “independence”, and the other Non Executive Director also has submitted his declaration. These have been tabled at the Board Meetings.
Ceylinco Insurance PLC 123 Annual Report 2011 Report of the Directors
Analysis of Shareholders (Voting) Holding Range Number of Number of % (Shares) Shareholders Shares
1 to 1,000 2,347 584,504 2.93 1,001 to 5,000 416 799,822 4.00 5,001 to 10,000 64 448,632 2.24 10,001 to 50,000 39 747,174 3.74 50,001 to 100,000 2 150,766 0.75 100,001 to 500,000 4 788,511 3.94 500,001 to 1,000,000 5 2,878,992 14.39 Over 1,000,000 5 13,601,599 68.01 Total as at 31st. Dec. 2011 2,882 20,000,000 100.00
Analysis of Shareholders (Non - Voting) Holding Range Number of Number of % (Shares) Shareholders Shares
1 to 1,000 1,374 385,928 6.01 1,001 to 5,000 97 230,441 3.59 5,001 to 10,000 21 175,527 2.74 10,001 to 50,000 15 387,943 6.05 50,001 to 100,000 2 149,400 2.33 100,001 to 500,000 7 1,539,841 24.01 500,001 to 1,000,000 0 0 0 Over 1,000,000 2 3,545,400 55.27 Total as at 31st. Dec. 2011 1,518 6,414,480 100.00
Percentage of “Public Holding” (as defined by the Colombo Stock Exchange Circular amended in January, 2004) is 39.29% of the issued voting share capital and 41.08% of the issued non-voting share capital.
Analysis of Shareholdings Institutional / Non - Institutional
Shareholder Total Holdings Category Shareholdings %
(Voting)
Individuals 2,578,355 12.89 Institutions 17,421,645 87.11 20,000,000 100.00 (Non - Voting)
Individuals 901,675 14.06 Institutions 5,512,805 85.94 6,414,480 100.00
Ceylinco Insurance PLC 124 Annual Report 2011 Donations During the year charitable donations amounting to Rs. 1.6 million were made by the Company.
Taxation The Company is liable for income tax at 28%.
The Income Tax Liability of the General Division for the year amounted to Rs. 141.7 million and no tax liability arose on the Life Insurance businesses due to tax losses.
Capital Expenditure & Capital Commitments The total expenditure on acquisition of Property, Plant and Equipment during the year amounted to Rs. 737 Million.
The 20 major shareholders as at 31.12.2011 (Voting)
Shareholder Holding as at % of the Holding as at 31/12/2011 issued share 31/12/2010 No. of Shares Capital No. of Shares as at 31/12/2011
Ciesot (Private) Limited 4,571,891 22.86 4,708,891 Global Rubber Industries (Private) Limited 4,034,964 20.17 250,200 Pictet & Cie 2,136,100 10.68 2,136,100 Ceylinco Insurance PLC A/C No. 03 (Employees’ Gratuity Trust Fund) 1,811,544 9.06 1,731,344 Mr. Prabhash Subasinghe 1,047,100 5.24 337,900 Ceylinco Insurance PLC A/C No. 04 (Pension Fund) 737,900 3.69 737,900 Citizens Development Business Finance PLC 564,000 2.82 564,000 Mr. Watuthanthrige Chakrine Jagath Alwis 526,692 2.63 526,692 Castle Realty (Private) Limited 525,400 2.63 525,400 Global Sea Foods (Private) Limited 525,000 2.63 200,000 Ceylinco Insurance PLC – A/C No. 05 (The Pension Trust Fund of Ceylinco Insurance PLC) 352,300 1.76 92,300 Est. of Mrs. Manjula Morarji Udeshi 195,728 0.98 195,728 Mr. Rajkumar Renganathan (Mr. R. Renganathan 121,124 shares and joint with Mrs. T.R.S. Renganathan 3,626 shares) 124,750 0.61 124,750 Mr. Ajith Rohan Gunawardena (Mr. A.R. Gunawardena 130 shares and joint with Mrs. K.S. Gunawardena 119,359 shares) 119,489 0.60 119,489 National Development Bank of Sri Lanka / Mouldex Limited 95,880 0.48 95,880 Mr. Jivaka Lalith Bhupendra Kotelawala (Mr. J.L.B. Kotelawala 36,745 shares and joint with Mrs. S.P.C. Kotelawala 18,141 shares) 54,886 0.27 54,886 Seylan Bank PLC / Thirugnanasambandar Senthilverl 42,700 0.21 -- The Finance Company Ltd. (Employees’ Medical Fund) 36,284 0.18 36,284 Bank of Ceylon A/C Eagle Growth Fund 35,000 0.18 35,000 Mr. Charitha Prasanna De Silva 33,100 0.17 --
Ceylinco Insurance PLC 125 Annual Report 2011 Report of the Directors
The 20 major shareholders as at 31.12.2011 (Non Voting)
Shareholder Holding as at % of the Holding as at 31/12/2011 issued share 31/12/2010 No. of Shares Capital No. of Shares as at 31/12/2011 Pershing LLC S/A Averbach Grauson & Co. 2,473,300 38.56 1,269,500 Ceyfco Property Company (Private) Limited 1,072,100 16.71 1,143,000 J.B. Cocoshell (Pvt.) Ltd. 457,700 7.14 330,100 Bharath Investments (Private) Limited 269,200 4.20 269,200 Mr. Watuthanthrige Chakrine Jagath Alwis 219,041 3.41 219,041 Pictet & Cie 200,000 3.12 200,000 Mr. Piyadasa Rathnayaka 175,000 2.73 175,000 Gold Investment Limited 118,500 1.85 118,500 E.W. Balasuriya & Company (Private) Limited 100,400 1.57 100,400 Askold (Private) Limited 80,000 1.25 80,000 Waldock Mackenzie Ltd/Mr. M.Z.M. Wafik 69,400 1.08 52,900 Mr. Husein Nuruddain Esufally 50,000 0.78 50,000 Mr. Gulzar Hussein Ibrahim Jafferjee 45,000 0.70 45,000 Mr. Isaac Morris Dabah 44,900 0.70 44,900 DFCC Bank A/c 1 43,971 0.69 43,971 Mr. Murtaza Ali Jafferjee 42,500 0.66 42,500 HSBC International Nominees Limited-MSNY – Kelusa Master Fund Ltd. 28,772 0.45 28,772 Mr. Abbasally Nuruddin Esufally 25,000 0.39 25,000 Deutsche Bank AG-Comtrust Equity Fund 20,000 0.31 -- Mr. Ahmed Hassan Manik Ahmed 14,300 0.22 14,300 Gulf Crown Investments Limited 14,300 0.22 14,300
Property, Plant & Equipment The details of Property, Plant and Equipment of the Company are shown in the “Notes to Financial Statements”. (Pages 180 to 182.
The market value of Property, Plant and Equipment are considered not materially different to the book values as given in “Notes to the Financial Statements”. Property, Plant and Equipment are carried in the books at Rs. 5.066 Billion.
Current Assets The Directors of the Company have taken reasonable steps to ascertain that whatever current assets of the Company which were unlikely to realise their book values in the ordinary course of business have been written down to their estimated realisable values or adequate provisions have been made for the differences between those values.
Post-Balance Sheet Events & Unusual Items Since the end of the financial year, no change in the assets of the Company have arisen which secures the liabilities of any other persons.
In the opinion of the Directors, no item, transaction or event of a material nature has arisen in the interval between the end of the financial year and the date of this report which would affect substantially, the results of the operations of the Company for the current financial year.
Ceylinco Insurance PLC 126 Annual Report 2011 Human Resources It is a Company policy to provide equal opportunities in the recruitment and employment of staff. During the year under review, the Company has taken numerous measures to ensure staff contentment at all levels. As at December, 2011, there were 3,067 employees in the permanent service of the Company.
Actuarial Valuation – Life Fund The last actuarial valuation of the Life Fund was done as at 31-12-2011. In accordance with the Actuarial Report dated 15th. February, 2012 a surplus of Rs. 700 million was transferred to life shareholders’ fund from life policyholders’ fund.
The next statutory valuation is due for the financial year ended 31st. December, 2012.
Actuarial Valuation - General Insurance - IBNR / IBNER
The Company has appointed M/s K.A. Pandit, Consultant Actuaries to certify the IBNR/IBNER provisions made in the accounts as at 31.12.2011.
After reviewing the relevant information and Actuarial studies the Actuaries have recommended to make a net IBNR/ IBNER provision of Rs. 185.6 million. The Company has already made this provision in the accounts as at 31.12.2011.
Auditors The Accounts for the year have been audited by M/s. Ernst & Young (Chartered Accountants) who expressed their willingness to continue in office. In accordance with the Companies’ Act No. 7 of 2007, a resolution relating to their re-appointment and authorising the Directors to fix their remuneration will be proposed at the forthcoming Annual General Meeting.
The fees paid to the Auditors are disclosed in note 22 on page 191 to the Financial Statements.
The Auditors of the Company, Messrs. Ernst & Young do not have any relationship with the Company other than that as the Auditors.
BY ORDER OF THE BOARD
A. R. Gunawardena Managing Director / Chief Executive Officer (General Insurance)
R. Renganathan Managing Director / Chief Executive Officer (Life Insurance)
Mrs. T. N. Jasenthuliyana Company Secretary / Senior Assistant General Manager Company Secretary / 23rd. February, 2012 Senior Assistant General Manager
Ceylinco Insurance PLC 127 Annual Report 2011 Report of the Directors (Annexure)
Directors’ Interests in Contracts No Director of the Company is directly or indirectly interested in the contracts of the Company.
The following is a schedule where the Directors of this Company held Directorships in other companies during the period 01.01.2011 to 31.12.2011 in which this Company has had transactions during the year 2011.
Name of Company Mr. A.R. A.R. Gunawardena Mr. Renganathan R. Mr. Alwis H.D.K.P. Mr. Ranasinghe E.T.L. Mr. Alwis W.C.J. Mr. Jayawardena P.A. Mr. Nugawela N.D. Mr. Peiris T.N.M. Mr. Upali D.W.P. Mr. Abeynayake S.R. Mr. Fernando P.M.B Mr.
1 American Education Centre Ltd. 9 9 9 9 2 CEG Education Holdings (Pvt.) Ltd. 9 9 9 9 3 Ceyfco Property Co. (Pvt.) Ltd 9 9 4 Ceyhydro Developers (Pvt.) Ltd. 9 9 9 9 9 5 Ceylinco Health Care Services Ltd. 9 9 9 6 Ceylinco Insurance Company (Pvt.) Ltd. (Maldives) 9 9 9 9 9 9 7 Ceylinco Investcorp (Pvt.) Ltd. 9 9 9 9 9 9 8 Ceylinco Seraka Ltd. 9 9 9 9 9 Ceypower Cascades (Pvt.) Ltd. 9 9 9 9 10 CGL Educational Services (Ceylinco Group Library) 9 9 9 11 Citizens Development Business Finance PLC (Formerly Ceylinco Development Bank Ltd.) 9 9 9 9 12 Energy Generators (Pvt.) Ltd. 9 9 9 9 9 9 13 International College of Business & Technology Ltd. 9 9 9 9 9 14 Net Assist International (Pvt.) Ltd. 9999 15 St. Nicholas Education Services (Pvt.) Ltd. 999 16 Serene Resorts Ltd. 9 9 9 9 17 Ultratech Ceylinco (Pvt.) Ltd. 9 9 18 Wycherly International School (Pvt.) Ltd. 9 9
Ceylinco Insurance PLC 128 Annual Report 2011 Statement of Directors’ Responsibility
The responsibilities of the Directors in relation to the financial statements of the Company differ from the COMPLIANCE REPORT responsibilities of the Auditors, which are set out in In respect of the Financial Year ended 31st December, their report appearing on page 132. 2011 of Ceylinco Insurance PLC:
The Companies Act No. 7 of 2007, requires the $OOGRFXPHQWVUHTXLUHGE\WKH&RPSDQLHV$FW1RRI WREHILOHGZLWKWKH5HJLVWUDURI&RPSDQLHVKDYH Directors to prepare financial statements for each EHHQGXO\ILOHGDQG&RPSOLDQFHKDVEHHQPDGHZLWKDOO financial year giving a true and fair view of the state RWKHU OHJDO UHTXLUHPHQWV LQ FRQQHFWLRQ ZLWK WKH VDLG of affairs of the Company as at end of the financial &RPSDQLHV$FW year and of the Profit or Loss of the Company for the $OO'LYLGHQGFKHTXHVKDYHEHHQGLVSDWFKHGE\WKHGXH financial year. In preparing the financial statements GDWH appropriate accounting policies have been selected and applied consistently, reasonable and prudent judgements and estimates have been made and 0UV 71-DVHQWKXOL\DQD applicable accounting standards have been followed. &RPSDQ\6HFUHWDU\6HQLRU$VVLVWDQW*HQHUDO0DQDJHU UG)HEUXDU\ The Directors are responsible for ensuring that the Company keeps sufficient accounting records to disclose with reasonable accuracy, the financial position of the Company and for ensuring that the financial statements have been prepared and presented in accordance with the Sri Lanka Accounting Standards and provide the information required by the Companies Act No. 7 of 2007. They are also responsible for taking reasonable measures to safeguard the assets of the Company and in that context to have a proper regard to the establishment of appropriate systems of internal control with a view to preventing and detecting fraud and other irregularities.
The Directors continue to adopt the going concern basis in preparing Accounts. The Directors, after making enquiries and following a review of the Company’s budget for 2012 to 2013 including cash flows and borrowing facilities, consider that the Company has adequate resources to continue in operation.
BY ORDER OF THE BOARD
Mrs. T. N. Jasenthuliyana Company Secretary/Senior Assistant General Manager
23rd. February, 2012
Ceylinco Insurance PLC 129 Annual Report 2011 Actuarial Report (General)
Ceylinco Insurance PLC 130 Annual Report 2011 Actuarial Report (Life)
Ceylinco Insurance PLC 131 Annual Report 2011 Report of the Auditors
TO THE SHAREHOLDERS OF statements. An audit also includes In our opinion, so far as appears from CEYLINCO INSURANCE PLC assessing the accounting policies used our examination, except for the effect of and significant estimates made by such adjustments ,if any, as might have Report on the Financial Statements management, as well as evaluating the been determined to be necessary had overall financial statement presentation. we been able to satisfy ourselves of the We have audited the accompanying matter referred in paragraph 01 above, financial statements of Ceylinco the consolidated financial statements Insurance PLC (“Company”), the Except for the matter stated in paragraph give a true and fair view of the state of consolidated financial statements of 01 below of group opinion, we have affairs as at 31 December 2011 and the the Company and its subsidiaries obtained all the information and profit and cash flows for the year then which comprise the balance sheets as explanations which to the best of our ended, in accordance with Sri Lanka at 31 December 2011, and the income knowledge and belief were necessary for Accounting Standards, of the Company statements, statements of changes in the purposes of our audit. We therefore and its subsidiaries dealt with thereby, so equity and cash flow statements for believe that our audit provides a far as concerns the shareholders of the the year then ended, and a summary of reasonable basis for our opinion. Company. significant accounting policies and other explanatory notes. Opinion Report on Other Legal and Regulatory Requirements Management’s Responsibility for the Company Financial Statements In our opinion, so far as appears In our opinion, these financial statements also comply with the requirements of Management is responsible for the from our examination, the Company Section 151(2) and Sections 153(2) to preparation and fair presentation of maintained proper accounting records 153(7) of the Companies Act No. 07 of these financial statements in accordance for the year ended 31 December 2011 2007 except for as described in Note with Sri Lanka Accounting Standards. and the financial statements give a true 4.2.(a.ii) and 4.2.(b) the Company has not This responsibility includes: designing, and fair view of the Company’s state of consolidated certain group companies. implementing and maintaining internal affairs as at 31 December 2011 and its control relevant to the preparation and profit and cash flows for the year then fair presentation of financial statements ended in accordance with Sri Lanka In our opinion, the accounting records that are free from material misstatement, Accounting Standards. of Ceylinco Insurance PLC has been whether due to fraud or error; selecting maintained by the management in the and applying appropriate accounting Group manner required by the rules made policies; and making accounting by the Insurance Board of Sri Lanka 1) As explained in Note 4.2 (a) and established under the regulation of estimates that are reasonable in the Note 4.2 (b) four subsidiaries circumstances. Insurance Industry Act No. 43 of 2000 have not been consolidated up and Regulation of Insurance Industry to the date of loss of control, (Amendment) Act No. 3 of 2011 so as to Scope of Audit and Basis of Opinion and an associate company has clearly indicate the true and fair view of Our responsibility is to express an not been accounted under the the financial position of the insurer. opinion on these financial statements equity method of accounting as based on our audit. We conducted our required by Sri Lanka Accounting audit in accordance with Sri Lanka Standard 26 “Consolidated and Auditing Standards. Those standards Separate Financial Statements” and require that we plan and perform the Sri Lanka Accounting Standard audit to obtain reasonable assurance 27 “Investment in Associates” whether the financial statements are free respectively. The company has from material misstatement. not quantified the impact on the departure of Sri Lanka Accounting 23 February 2012 An audit includes examining, on a Standards on the Group Financial Colombo test basis, evidence supporting the Statements. amounts and disclosures in the financial
Ceylinco Insurance PLC 132 Annual Report 2011 Balance Sheet
As at 31st December Consolidated Company 2011 2010 2011 2011 Note Page No Rs.’000 Rs.’000 Rs.’000 Rs.’000 Assets Investments 2 166 42,693,108 30,184,513 42,060,825 29,868,661 Investment Property 3 173 3,212,090 2,590,381 3,212,090 2,590,381 Investments in Subsidiaries 4 175 - - 1,387,459 1,282,169 Investments in Associates 5 177 782,457 360,172 328,143 165,475 Intangible Assets 6 178 231,152 82,696 36,808 82,696 Property, Plant & Equipment 7 179 7,418,405 7,019,993 5,065,660 5,230,340 Leasehold Rights 8 183 26,728 5,362 21,992 - Loans to Life Policyholders 771,905 698,071 771,905 698,071 Reinsurance Receivable 9 184 1,905,304 2,413,562 1,854,919 2,394,028 Premium Receivable 2,167,524 2,365,254 1,929,915 2,259,029 Deferred Tax Asset 24.3 193 310,934 489,235 304,672 489,235 Other Assets 10 184 3,972,435 3,727,914 3,825,733 3,697,043 Cash at Bank and in hand 769,004 750,780 531,675 575,517 Total Assets 64,261,046 50,687,933 61,331,796 49,332,645
Liabilities and Shareholders’ Equity Liabilities Insurance Provision - Life 11 185 38,203,473 31,868,141 38,203,473 31,868,141 Unit linked Fund - Life 146,659 115,269 146,659 115,269 Insurance Provision - Non - Life 12 186 6,660,532 6,225,043 6,536,751 6,152,883 Obligation to Repurchase Securities 3,856,822 798,727 3,856,822 798,727 Deferred Tax Liabilities 24.4 194 37,207 25,367 - - Other Liabilities 13 187 2,793,371 1,793,067 1,577,583 1,322,556 Reinsurance Payable 287,975 398,388 246,085 388,912 Agency Commission Payable 481,693 464,608 474,907 457,597 Policyholders’ Advance Payments 281,193 252,892 281,193 252,892 Bank overdraft 619,538 374,512 558,278 368,560 Total Liabilities 53,368,463 42,316,014 51,881,751 41,725,537
Shareholders’ Equity Equity Attributable to Equity Holders of the Parent Stated Capital 14 187 1,324,822 1,324,822 1,324,822 1,324,822 Revaluation Reserve 2,150,126 1,344,336 1,686,281 827,395 Revenue Reserves 6,962,918 5,550,691 6,438,942 5,454,891 10,437,866 8,219,849 9,450,045 7,607,108 Minority Interest 454,717 152,070 - - Total Equity 10,892,583 8,371,919 9,450,045 7,607,108 Total Equity and Liabilities 64,261,046 50,687,933 61,331,796 49,332,645
The above Balance Sheet is to be read in conjunction with the notes to the Financial Statements on pages 152 to 201 which form an integral part of the financial statements. These Financial Statements are prepared in compliance with the requirements of the Companies Act No.07 of 2007.
...... Chief Financial Officer - Non Life Insurance Chief Financial Officer - Life Insurance D.W.P. Upali P.A. Jayawardene
The Board of Directors are responsible for the preparation and presentation of these Financial Statements On behalf of the Board.
...... A.R. Gunawardena R. Renganathan T.N.M.Peiris Managing Director / Managing Director / Director - Finance Chief Executive Officer Chief Executive Officer (General Insurance) (Life Insurance) 23rd. February, 2012 Ceylinco Insurance PLC 133 Annual Report 2011 Income Statement
For the year ended 31st December Consolidated Company Page 2011 2010 Change 2011 2010 Change Note No. Rs.’000 Rs.’000 % Rs.’000 Rs.’000 %
Revenue 15 188 22,454,587 20,272,382 11 21,908,099 19,781,362 11
Gross Written Premium 16 188 20,198,243 18,020,408 12 19,857,155 18,010,729 10 Less : Premium Ceded to Reinsurers 17 189 (2,304,434) (1,800,475) 28 (2,071,748) (1,812,969) 14 Net Written Premium 17,893,809 16,219,933 10 17,785,407 16,197,760 10 Net Change in Reserve for Unearned Premium (461,131) (289,780) 59 (422,984) (308,747) 37 Net Earned Premium 17,432,678 15,930,153 9 17,362,423 15,889,013 9 Revenue from Other Operations 497,493 401,900 24 - - 17,930,171 16,332,053 17,362,423 15,889,013
Benefits , Losses and Expenses Insurance Claims and Benefits (Net) 18 189 (7,431,589) (7,032,725) 6 (7,422,040) (7,025,225) 6 Increase in Life Insurance Fund (6,335,332) (5,418,174) 17 (6,335,332) (5,418,174) 17 Underwriting and Net Acquisition Costs (1,800,537) (1,612,477) 12 (1,816,256) (1,650,267) 10 (Including Reinsurance) Total Benefits , Losses and Expenses (15,567,458) (14,063,374) (15,573,628) (14,093,664) Cost of Sales of Subsidiaries (98,740) (67,506) 46 - - (15,666,198) (14,130,880) (15,573,628) (14,093,664) 2,263,973 2,201,173 1,788,795 1,795,349
Other Revenue Income from Investments 19 190 4,120,341 3,767,329 9 4,119,702 3,754,358 10 Other Income 20 190 404,075 172,999 134 425,974 137,991 209
Expenses Other Operating, Investment Related and Administrative Expenses 21 191 (4,984,678) (4,612,120) 8 (4,734,803) (4,416,269) 7 Depreciation (396,126) (377,571) (298,299) (299,265) Profit from Operations 22 191 1,407,585 1,151,810 22 1,301,369 972,163 34
Interest Expense (43,451) (92,112) -53 (30,311) (38,180) -21 Share of Profit from Associates ( Net of Tax) 23 191 191,977 70,945 171 - - Profit Before Taxation 1,556,111 1,130,643 38 1,271,058 933,983 36 Income Tax Expense 24 192 (163,327) (129,030) (141,727) (130,696) Profit for the Year 1,392,784 1,001,613 39 1,129,331 803,287 Attributable to : Equity Holders of the Parent 1,372,169 961,639 Minority Interest 20,615 39,974 Profit for the year 1,392,784 1,001,613 39 Basic Earnings Per Share (Rs) 25 195 51.95 36.41 43 42.75 30.41
Dividend Per Share (Rs) 26 195 - Final Dividend Proposed 6.50 5.50 6.50 5.50
The above Income Statement is to be read in conjunction with the notes to the Financial Statements in pages 152 to 201 which form an integral part of the financilal statements.
Ceylinco Insurance PLC 134 Annual Report 2011 Statement of Changes in Equity n integral part of the Financial Statements. Statements. n integral part of the Financial General Retained General Total Equalisation Dividend ’ Dividend Policyholders’ Policyholders
Reserve Reserve Reserve Earnings Reserve Reserve Reserve 1,324,822 1,344,336 37,021 50,000 1,970,416 3,493,254 152,070 8,371,919 1,324,822 828,560 37,021 50,000 1,970,416 2,663,687 85,680 6,960,186 1,324,822 828,560 37,021 50,000 1,970,416 2,726,239 6,937,058 Dividends of Subsidiary Companies to Minority Shareholders Adjustments Consolidation Adjustment due to Structural Reorganisation - Year Profit for the ------(5,055) - - (5,055) - 53,012 - - 132,326 - 1,372,169 227,802 53,012 20,615 360,128 1,392,784 Balance as at 31st December 2011 1,324,822 2,150,126 37,021 50,000 1,970,416 4,905,481 454,717 10,892,583 2010 Balance as at 1st January Revaluation Company Stated 2010 Balance as at 1st January Final Dividend of Parent Company Dividend of Parent Final Issue of voting ordinary shares during the year Year Surplus /(Deficit) During the Revaluation Surplus on Revaluation Tax Effect of Deferred Year Profit for the Balance as at 31st December 2010 company dividend of Parent Final Year Surplus /(Deficit) During the Revaluation - - - 546,877 (31,101) - - - 989,531 ------Dividend paid Final - - Year Surplus /(Deficit) During the Revaluation - - - - (132,072) Balance as at 31st December 2010 - - - Dividend Paid Final - - - (132,072) - 59,285 - - - - 1,048,816 (145,280) - 26,416 546,877 (1,165) 1,324,822 - (31,101) 26,416 961,639 - 827,395 (145,280) 39,974 37,021 1,001,613 - - 50,000 1,970,416 3,397,454 - - - 7,607,108 ------(132,072) - (1,165) - (145,280) (132,072) (145,280) Effect of Deferred Tax on Revaluation Surplus on Revaluation Tax Effect of Deferred - (183,741) - - Year Profit for the - Year Surplus /(Deficit) During the Revaluation Surplus on Revaluation Tax Effect of Deferred - Year Profit for the Balance as at 31st December 2011 - form a above Statement of Changes in Equity is to be read conjunction with the notes as set out pages 152 201 which The (183,741) - 1,043,447 - (184,561) 1,324,822 - 1,686,281 - 37,021 - - 50,000 - 1,970,416 4,381,505 - - - - - 9,450,045 - - - - 1,043,447 - - 803,287 - (184,561) - 1,129,331 803,287 1,129,331
Capital Reserve Benefit Reserve Capital ‘000 Rs. Rs.’000 Rs.’000 Rs.’000 ‘000 Rs. ‘000 Rs. ‘000 Rs. Stated Revaluation Benefit Equalisation General Retained Minority Total Minority Retained Interest General Earnings Equalisation Reserve Reserve Benefit Reserve Revaluation Reserve Stated Capital Consolidated ‘000 Rs. Rs.’000 Rs.’000 Rs.’000 ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs.
Ceylinco Insurance PLC 135 Annual Report 2011 Cash Flow Statement
Consolidated Company For the year ended 31st December, 2011 2010 2011 2010 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Cash Flows from Operating Activities Premiums/Revenue received from Customers 20,991,400 18,714,944 20,214,574 18,056,138 Reinsurance Premiums (net of Commission) Paid (2,134,762) (1,732,131) (1,934,490) (1,705,983) Commission Paid (2,159,438) (1,995,657) (2,139,790) (1,976,661) Claims and Benefits Paid (8,054,014) (8,453,921) (8,008,574) (7,817,156) Reinsurance Receipts in respect of Claims & Benefits 1,204,583 1,561,164 1,144,355 871,150 Interest and Dividends Received 3,904,646 3,797,823 3,930,154 3,785,132 Other Operating Cash Payments (4,451,189) (4,384,670) (4,099,691) (3,879,903) Other Income 121,180 165,513 146,760 114,868 Contributions to Gratuity Fund/Gratuity payments (100,948) (45,300) (100,872) (45,300) Income Taxes Paid (148,021) (136,102) (141,727) (130,696) Interest paid (40,913) (92,112) (30,310) (38,180) Net Cash Flows from Operating Activities ( Note A) 9,132,524 7,399,551 8,980,389 7,233,409 Cash Flows from Investing Activities Investments in Subsidiaries (10,000) (39,344) (10,000) (39,344) Acquisition of Associates (16,210) - (16,210) - Acqusition of Investment Property (186,284) (22,400) (186,284) (22,400) Acquisition of Liquid Investments (Other than Cash Equivalents) (205,294,914) (138,947,576) (205,294,914) (138,947,577) Acquisition of Other Investments (Other than Cash Equivalents) (5,594,234) (601,354) (5,464,139) (531,797) Proceeds from sale of Liquid Investments (Other than Cash Equivalents) 194,506,006 132,382,503 194,581,378 132,265,032 Proceeds from sale of Other Investments (Other than Cash Equivalents) 3,880,201 542,194 3,736,343 566,501 Proceeds from sale of Other Investments (Other than Cash Equivalents) 12,074 13,699 12,074 13,699 Acquisition of Property , Plant & Equipment (610,795) (628,456) (440,033) (587,128) Acquisition of Intangible Assets (6,469) (5,409) (6,469) (5,409) REREPO Borrowings (net) 3,060,116 262,665 3,058,095 262,665 Proceeds from Disposal of Property , Plant & Equipment 962,450 46,729 961,490 41,258 Net Cash Flows from Investing Activities (9,298,059) (6,996,749) (9,068,669) (6,984,500) Cash Flows from Financing Activities Proceeds from Issue of Ordinary Shares 207,636 65,760 - - Term Loan (116,553) (92,583) - - Dividends Paid to parent Company shareholders (152,348) (132,071) (145,280) (132,071) Net Cash Flows from Financing Activities (61,265) (158,894) (145,280) (132,071) Increase / (Decrease in Cash & Cash Equivalents ( Note B) (226,803) 243,908 (233,560) 116,838 Note A. Reconciliation of Profit from operations with Net Cash Flows from Operating Activities Profit from Operations 1,407,585 1,151,810 1,301,369 972,163 Adjustments for: Depreciation 396,126 377,571 298,299 299,265 Amortisation of Intangible Assets 52,356 57,791 52,356 57,791 Change in Trade and Other Receivables 251,552 512,913 395,352 335,317 Change in Reinsurance Receivable 599,587 138,005 630,435 (386,323) Increase in Life Insurance Funds 6,366,722 5,430,771 6,366,722 5,430,771 Increase in Non - Life Insurance Provisions 435,489 147,952 383,868 685,924 Change in Trade and Other Payables 49,571 (234,428) (39,475) (43,185) Gain on sale of Property, Plant & Equipment (266,255) (24,983) (265,295) (19,803) Gain on sale of Investments (44,780) (88,247) (44,780) (88,247) Provision for fall in value of Investments (15,255) 158,613 (15,255) 158,613 Income Tax Paid (148,091) (136,105) (141,727) (130,697) Fair value changes in Investment Property 88,830 - 88,830 - Interest Paid (40,913) (92,112) (30,310) (38,180) Net Cash Flows from Operating Activities 9,132,524 7,399,551 8,980,389 7,233,409 Note B. Cash and Cash Equivalents at 1st January 376,268 132,360 206,957 90,119 Cash and Cash Equivalents at 31st December 149,465 376,268 (26,603) 206,957 Increase / (Decrease) in Cash and Cash Equivalents (226,803) 243,908 (233,560) 116,838
The above Cash Flow Statement is to be read in conjunction with the notes as set out in pages 152 to 201. which form an integral part of the financilal statements.
Ceylinco Insurance PLC 136 Annual Report 2011 Insurance Revenue Account
For the year ended 31st December, 2011 2010 % Glossary item Rs. ‘000 Rs. ‘000 Change
Non - Life Insurance Gross Written Premium 20 10,041,212 9,224,608 8.85 Net Earned Premium 31 7,782,907 7,249,160 7.36 Net Claims Incurred 36 (4,475,745) (4,339,864) 3.13 Underwriting and net of Acquisition Costs (Including Reinsurance) 43 and 2 (589,532) (478,770) 23.13 Underwriting Result 55 2,717,630 2,430,526
Other Operating, Investments Related and Administrative Expenses (2,784,416) (2,498,266) 11.45 Investment and Other Income 663,740 438,080 51.51 Interest Expense (22,001) (27,352) (19.56) Profits from Operations after Interest Expense 574,953 342,989 67.63
Key ratios Non - Life Insurance
Net loss Ratio 33 57.51 59.87 (3.94) Net Expense Ratio 32 44.34 41.51 6.81 Net Combined Ratio 30 101.84 101.38 0.46
Life Insurance Gross Written Premium 19 9,815,943 8,786,121 11.72 Net Written Premium (Net of Reinsurance Premium and Commission) 35 9,579,516 8,639,853 10.88 Investment and Other Income attributable to Policyholders 3,827,838 3,387,446 13.00 Net Benefits Payable (2,946,295) (2,685,361) 9.72 Increase in Long Term Insurance Fund (6,335,332) (5,418,174) 16.93 Commissions 13 (1,226,724) (1,171,497) 4.71 Operating and Administrative Expenses attributable to Policyholders (2,190,693) (2,141,439) 2.30 Interest Expense (8,310) (10,828) (23.25) Surplus from Life Insurance Business 25 700,000 600,000 16.67
Surplus from Life Insurance Business 700,000 600,000 Investment & other income not attributable to Policyholders 54,098 66,823 Operating and Administrative Expenses not attributable to Policyholders (57,993) (58,167) Investment write off & Diminution of Value of Investment not attributable to Policyholders - (17,661) Profits from Operations after Interest Expense 696,105 590,995
Ceylinco Insurance PLC 137 Annual Report 2011 Industry Segment Data - Balance Sheet 2011
Cash and Equivalents 32,932 498,743 1,034 2,566 185,816 47,913 769,004 Other Assets Other 3,810,783 3,170,362 8,000 1,561 28,715 185,950 (3,232,936) 3,972,435 Deferred Tax Asset Tax Deferred (30,891) 335,563 - - - 6,262 - 310,934 Premium Receivable 1,929,915 - 2,671 24,651 52,710 182,156 (24,579) 2,167,524 Reinsurance Receivable 1,831,062 23,857 - - 50,385 - - 1,905,304 Loans to Life Policyholders Loans to Life Policyholders - 771,905 - - - - - 771,905 Leasehold Rights 16,403 5,589 - - - 4,736 - 26,728 Bank Overdraft 26,410 531,868 5,607 1,804 - 53,849 - 619,538 Property, Plant & Equipment Property, 1,669,516 3,396,144 251,348 13,149 3,405 2,084,843 - 7,418,405 Policyholders’ Advance Payments Advance Payments Policyholders’ - 281,193 - - - - - 281,193 Agency Commission Payable Agency Commission Payable 337,302 137,605 - - 6,786 - - 481,693 Intangible Assets Intangible - 36,808 - - - 194,344 - 231,152 Reinsurance Payable Reinsurance Payable 218,943 27,142 - - 41,890 - - 287,975 Deferred Tax Liabilities Tax Deferred - - - - - 37,207 - 37,207 Investments in Associates Investments in 56,222 271,921 - - - - 454,314 782,457 Other Liabilities 852,244 Equity Total 3,880,750 22,294 397,833 133,772 952,064 (3,445,586) 2,793,371 8,004,036 1,446,009 412,152 9,384 90,785 1,905,523 (975,306) 10,892,583 Assets Obligation to Repurchase Securities Obligation to Repurchase 265,000 3,591,822 - Minority Interest - - - - 3,856,822 - - - - - 55,483 399,234 454,717 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Investments in Subsidiaries 866,459 521,000 - - - - (1,387,459) - Insurance Provision - Non Life 6,536,751 - Reserves Revenue - - 123,781 - 6,438,942 - 6,660,532 - (113,148) 7,884 2,522 271,548 355,170 6,962,918 Unit Linked Fund - Life Unit Linked - 146,659 Reserve Revaluation - - - 599,024 1,087,257 - - - 146,659 - - 517,761 (53,916) 2,150,126 As at 31st December Insurance Insurance Management Oper.Male Operations Investment Property 1,143,283 2,068,807 - - - - - 3,212,090 Non-Life Life Healthcare Investment Foreign Other Adjustments Total Adjustments Other Foreign Investment Healthcare Life Non-Life Assets Total Equity Liabilities and Shareholder’s Insurance Provision - Life 16,240,686 48,246,521 Liabilities Total - 440,053 38,203,473 Shareholders’ Equity Stated Capital 409,021 397,014 - 2,948,643 (4,420,892) Equity and Liabilities Total 64,261,046 - 8,236,650 - 46,800,512 27,901 16,240,686 966,070 - 48,246,521 399,637 358,752 440,053 306,229 525,300 1,043,120 409,021 - 38,203,473 (3,445,586) 397,014 53,368,463 1,500 2,948,643 88,263 (4,420,892) 1,060,731 64,261,046 (1,675,794) 1,324,822 Investments 4,915,002 37,145,822 177,000 367,094 75,983 242,439 (230,232) 42,693,108 Liabilities Liabilities
Ceylinco Insurance PLC 138 Annual Report 2011 Industry Segment Data - Balance Sheet 2010 Cash and Equivalents 334,891 240,626 467 3,371 149,358 22,067 750,780 Other Assets Other 3,247,423 2,975,201 6,813 856 20,670 150,299 (2,673,349) 3,727,914 Deferred Tax Asset Tax Deferred 68,607 420,628 - - - - - 489,235 Premium Receivable 2,259,029 - 869 Bank overdraft 14,334 59,609 31,413 - 2,365,254 161,906 206,654 5,855 - - 97 - 374,512 Reinsurance Receivable 2,322,006 72,022 - Advance Payments Policyholders’ - 19,534 - - 252,892 - 2,413,562 - - - - - 252,892 Loans to Life Policyholders Loans to Life Policyholders - 698,071 - Agency Commission Payable - - 325,339 132,258 - - - 698,071 - 7,011 - - 464,608 Leasehold Rights - Reinsurance Payable - - - 241,357 - 147,555 5,362 - - - 5,362 9,476 - - 398,388 Property, Plant & Equipment Property, 2,139,601 3,090,739 279,159 3,880 1,883 1,504,730 Liabilities Tax Deferred 7,019,993 25,367 25,367 Other Liabilities 706,645 3,141,492 11,331 527,808 71,782 328,610 (2,994,604) 1,793,067 Intangible Assets Intangible - 82,696 - - - - - 82,696 Assets Assets Investments in Associates Investments in 40,012 125,463 - Securities Obligation to Repurchase - 257,313 - 541,414 - 194,697 - 360,172 Minority Interest - - - - - 798,727 - - - - - 152,070 152,070 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Investments in Subsidiaries 761,169 521,000 - Insurance Provision - Non Life - - 6,152,883 - (1,282,169) - Reserves Revenue - - - 72,160 - 5,454,891 - 6,225,043 - (131,178) 6,106 2,362 81,665 136,846 5,550,691 Investment Property 1,365,396 1,224,985 - Fund - Life Unit linked - - - - 115,269 Reserve Revaluation - 2,590,381 - - - 636,205 191,190 - - - 115,269 - - 516,941 - 1,344,336 As at 31st December Insurance Insurance Management Oper.Male Operations Non-Life Life Healthcare Investment Foreign Other Adjustments Total Adjustments Other Foreign Investment Healthcare Life Non-Life Investments 2,364,475 Assets Total 27,504,186 Equity Liabilities and Shareholder’s 124,000 Insurance Provision - Life 512,973 - 1,120 (322,241) 14,902,609 30,184,513 36,955,617 Liabilities Total - 411,308 31,868,141 Shareholders’ Equity Stated Capital 535,414 251,054 - 1,714,991 Equity Total (4,083,062) 50,687,933 - 7,845,444 - 36,405,675 17,186 966,070 - 527,808 358,752 160,429 525,300 7,057,166 354,074 - 31,868,141 (2,994,604) 549,942 1,500 42,316,014 394,122 88,263 762,311 (1,377,374) 7,606 1,324,822 90,625 1,360,917 (1,088,458) 8,371,919 Liabilities Liabilities Equity and Liabilities Total 14,902,609 36,955,617 411,308 535,414 251,054 1,714,991 (4,083,062) 50,687,933
Ceylinco Insurance PLC 139 Annual Report 2011 Industry Segment Data - Statement of Income 2011
2,717,630 (928,835) 172,259 12,884 76,425 239,462 (25,852) 2,263,973 7,782,907 9,579,516 217,121 12,884 70,255 293,340 (25,852) (5,065,277) 17,930,171 (10,508,351) (44,862) - 6,170 (53,878) - (15,666,198) Income from Subsidiaries Cost of Sales Subsidiaries - - 217,121 12,884 - - 293,340 - (25,852) (44,862) 497,493 - (53,878) - (98,740) Net Earned Premium 7,782,907 9,579,516 - - 70,255 - - 17,432,678 Total Benefits , Losses and Expenses Benefits , Total (5,065,277) (10,508,351) - - 6,170 - - (15,567,458) Revenue 8,446,647 13,461,452 229,974 12,840 61,975 301,974 (60,275) 22,454,587 Net Change in Reserve for Unearned Premium (422,984) Acquisition Cost Underwriting and Policy (Including Reinsurance) - - - (589,532) (1,226,724) - (38,147) - - - 15,719 - (461,131) - - (1,800,537) Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Depreciation (148,751) (149,548) (46,803) (676) (755) (49,593) - (396,126) Net Written Premium Net 8,205,891 9,579,516 Life Insurance Benefits - - 108,402 Other Income - - (2,946,295) - 17,893,809 - - 405,938 - 20,036 - - (44) 6,553 - (2,946,295) 6,015 (34,423) 404,075 Less - Premium Ceded to Reinsurers (1,835,321) (236,427) - Increase in Provision for Life Business - (232,686) - - (6,335,332) - (2,304,434) - - - Associates Income from - - (6,335,332) ------191,977 191,977 For the year ended 31st December For Insurance Insurance Management Oper.Male Operations Other Operating,Investment Related Administrative Expenses and (2,635,665) (2,099,138) (112,551) (9,767) (59,219) (84,036) 15,698 (4,984,678) Non-Life Life Healthcare Investment Foreign Other Adjustments Total Adjustments Other Foreign Investment Healthcare Life Non-Life Written Premium Gross 10,041,212 9,815,943 Losses and Expenses Benefits , Non Life Insurance losses and loss adjustment Expenses - - 341,088 (4,475,745) - Other Revenue Income from Investments - - Expenses 20,198,243 - Profit from Operations 257,802 Interest Expense - (9,549) 3,861,900 Taxation Profit Before 12,853 Expense Tax Income - Year Profit for the - 596,954 (14,833) - (4,485,294) 704,415 2,619 574,953 (22,001) 25,758 (141,727) 696,105 (8,310) 2,397 - 25,547 4,120,341 433,226 (211) 8,171 - 2,397 696,105 114,467 (8,119) 1,149 17,428 (44,577) - (7,022) 1,407,585 82,708 (615) 1,782 (31,759) 173,252 (989) 160 1,556,111 25,852 (11,877) 70,831 (43,451) 173,252 - 1,392,784 (163,327)
Ceylinco Insurance PLC 140 Annual Report 2011 Industry Segment Data - Statement of Income 2010 - - (38,815) - (28,691) - (67,506) 34) (9,275,032) (38,815) - 30,290 (28,691) - (14,130,880) ,293 590,995 15,297 2,425 527 109,130 70,945 1,001,613 0,696) - (3,826) (104) 5,596 - (129,030) 3 212
7,249,160 8,639,853 191,329 (8,419) 41,140 218,990 - 16,332,053 Cost of Sales Subsidiaries Income from Subsidiaries Losses and Expenses Benefits , Total - (4,818,634) - (9,275,032) 191,329 (8,419) - - - 218,990 30,290 - - 401,900 - (14,063,374) Net Earned Premium 7,249,160 ( Including Reinsurance) 8,639,853 - - 41,140 - - 15,930,153 Net Change in Reserve for Unearned Premium (308,747) - - Acquisition Cost Underwriting and policy (478,770) - 18,967 (1,171,497) - - - - 37,790 (289,780) - - (1,612,477) Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Other Income 126,918 11,073 - 51,427 - 3,903 (20,324) 172,999 Net written Premium 7,557,907 8,639,853 Life Insurance Benefits - - 22,173 - - (2,685,361) - 16,219,933 - - - - - (2,685,361) Less - Premium ceded to Reinsurers (1,666,701) (146,268) - Increase in Provision for Life Business - (20,219) - - (5,418,174) 32,713 (1,800,475) - Depreciation - Associates Income from - - (161,548) - (137,717) - (5,418,174) (46,850) (673) - (851) - (29,932) - - (377,571) - 70,945 70,945 For the year ended 31st December For Insurance Insurance Management Oper.Male Operations 2,430,527 (635,179) 152,514 (8,419) 71,430 190,299 - 2,201,173 Non-Life Life Healthcare Investment Foreign Other Adjustments Total Adjustments Other Foreign Investment Healthcare Life Non-Life Revenue Written Premium Gross 9,224,608 Losses and expenses Benefits , 8,786,121 adjustment Expenses 7,687,240 - 12,094,122 201,805 - 43,008 42,392 41,960 (4,339,864) 224,569 Other Revenue - Income from Investments (20,324) - (32,713) 20,272,382 18,020,408 Expenses Other Operating,Investment Related Administrative Expenses and - Profit from Operations 311,162 Interest Expense - (2,336,718) 3,443,196 (7,500) Taxation Profit before (2,079,550) 10,476 (96,800) - (39,806) (56,070) - 370,341 (23,499) - 820 601,823 (4,347,364) 342,989 20,324 (27,352) 19,340 1,676 (4,612,120) 590,995 (10,828) 2,529 19,123 (217) - 15,329 3,767,329 2,529 142,447 - 527 (14,802) - 103,534 (38,913) 1,151,810 70,945 1,130,643 - (92,112) Profit for the year (4,818,6 Non Life Insurance losses and loss Expenses Tax Income (1
Ceylinco Insurance PLC 141 Annual Report 2011 Industry Segment Data - Cash Flow Statement 2011
Non-Life Life Healthcare Investment Foreign Other Adjustments Total For the year ended 31 st December Insurance Insurance Management Oper.Male Operations Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000
Cash Flows from Operating Activities Premiums/Revenue Received from Customers 10,370,326 9,844,248 215,319 (4,838) 347,987 218,358 20,991,400 Reinsurance Premiums (net of Commission) Paid (1,577,650) (356,840) - - (200,272) - (2,134,762) Commission Paid (918,413) (1,221,377) - - (19,648) - - (2,159,438) Claims and Benefits Paid (4,949,339) (3,059,235) - - (45,440) - - (8,054,014) Reinsurance Receipts in respect of Claims & Benefits 986,185 158,170 - - 60,225 - - 1,204,583 Interest and Dividends Received 262,182 3,667,972 12,853 - 2,601 588 (41,550) 3,904,646 Other Operating Cash Payments (2,325,293) (1,774,398) (149,490) 23,867 (75,529) (166,044) 15,698 (4,451,189) Other Income 146,760 - - (44) (10,881) 4,070 (18,725) 121,180 Income Taxes Paid (141,727) - (5,589) (194) - (511) - (148,021) Interest Paid (22,000) (8,310) (211) - (7,022) (29,222) 25,852 (40,913) Payments to Gratuity Fund (35,640) (65,232) (76) - - - - (100,948) Net Cash Flows from Operating Activities (Note A) 1,795,391 7,184,998 72,806 18,791 52,021 27,239 (18,725) 9,132,524
Cash Flows from Investing Activities Investment in Subsidiary,net of cash acquired (10,000) ------(10,000) Acquisition of Associates (16,210) - - - - - (16,210) Acqusition of Investment Property (10,472) (175,812) - - - - (186,284) Acqusition of Liquid Investments (15,966,711) (189,328,203) - - - - (205,294,914) (Other than Cash Equivalents) Acqusition of Other Investments (5,424,657) (39,482) (53,000) - - (77,095) - (5,594,234) ( Other than Cash Equivalents) Proceeds from Sale of Liquid Investments 15,130,659 179,450,719 - - (75,983) 611 194,506,006 (Other than Cash Equivalents) ------Proceeds from Sale of Other Investments 3,646,952 89,391 - 143,858 - - 3,880,201 (Other than Cash Equivalents) (Acqusition)/Disposal of Property , Plant & Equipment (181,668) (258,365) (18,991) (9,945) (2,277) (139,549) - (610,795) Acqusition of Intangible Assets - (6,469) - - - (6,469) REREPO Borrowings (net) 7,687 3,050,408 - 2,021 - - 3,060,116 Proceeds from sale of Investment Property 12,074 ------12,074 Proceeds from Disposal of Property , Plant & Equipment 929,497 31,993 - - 960 962,450 Net Cash Flows from Investing Activities (1,882,849) (7,185,820) (71,991) 135,934 (78,260) (215,073) - (9,298,059)
Cash Flows from Financing Activities Term Loan - - - (157,335) 63,438 (22,656) - (116,553) Proceeds from Issue of Shares - - - - (741) 208,377 207,636 Dividends Paid to Parent Company Share Holders (79,005) (66,275) - - (25,793) 18725 (152,348) Net Cash Flows from Financing Activities (79,005) (66,275) - (157,335) 62,697 159,928 18,725 (61,265) Increase/(Decrease ) in Cash and cash Equivalents (Note B) (166,463) (67,097) 815 (2,610) 36,458 (27,906) - (226,803) Notes to the Cash Flow Statement Note A Reconciliation of Profit from Operations with Net Cash Flows from Operating Activities Profit from Operations 596,954 704,415 25,758 2,397 8,171 114,467 (44,577) 1,407,585 Adjustments for: Depreciation 148,751 149,548 46,803 676 755 49,593 - 396,126 Amortisation of Intangible Assets 52,356 - - - - 52,356 Change in Trade and Other Receivables 539,589 (144,237) (2,989) (11,022) (1,146) (128,643) - 251,552 Change in Reinsurance Receivable 582,270 48,165 - - (30,851) - - 599,587 Increase in Life Insurance Funds - 6,366,722 - - - - 6,366,722 Increase in Non - Life Insurance Provisions 383,868 - - - 51,621 - - 435,489 Change in Trade and Other Payables (22,449) (17,026) 9,034 26,934 30,493 22,585 - 49,571 Gain on Sale of Property, Plant & Equipment (259,178) (6,117) - - - (960) - (266,255) Gain on sale of Investments (44,780) ------(44,780) Provision for fall in value of Investments (54,737) 39,482 - - - - - (15,255) Change in fair value of Investment Property 88,830 ------88,830 Income tax paid (141,727) - (5,589) (194) - (581) - (148,091) Interest Paid (22,000) (8,310) (211) - (7,022) (29,222) 25,852 (40,913) Net Cash Flows from Operating Activities 1,795,391 7,184,998 72,806 18,791 52,021 27,239 (18,725) 9,132,524
Note B Cash and Cash Equivalents at 1st January 172,985 33,972 (5,388) 3,371 149,358 21,970 - 376,268 Cash and Cash Equivalents at 31st December 6,522 (33,125) (4,573) 761 185,816 (5,936) - 149,465 Increase / (Decrease) in Cash and Cash Equivalents (166,463) (67,097) 815 (2,610) 36,458 (27,906) - (226,803)
Ceylinco Insurance PLC 142 Annual Report 2011 Industry Segment Data - Cash Flow Statement 2010
Non-Life Life Healthcare Investment Foreign Other Adjustments Total For the year ended 31 st December Insurance Insurance Management Oper.Male Operations Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000
Cash Flows from Operating Activities Premiums/Revenue Received from Customers 9,276,892 8,779,246 196,418 28,697 247,551 218,853 (32,713) 18,714,944 Reinsurance Premiums (net of Commission) Paid (1,473,523) (232,460) - - (58,861) - 32,713 (1,732,131) Commission Paid (832,563) (1,144,098) - - (18,996) - - (1,995,657) Claims and Benefits Paid (5,093,115) (2,724,041) - - (636,765) - - (8,453,921) Reinsurance Receipts in respect of Claims & Benefits 755,658 115,492 - - 690,014 - - 1,561,164 Interest and Dividends Received 219,415 3,565,717 10,167 - 1,822 702 - 3,797,823 Other Operating Cash Payments (2,239,495) (1,640,408) (136,255) (27,730) (276,480) (83,425) 19,124 (4,384,670) Other Income 114,868 - - 70,797 (1,023) (5) (19,124) 165,513 Income Taxes Paid (130,696) - (2,477) (2,791) - (138) - (136,102) Interest Paid (27,352) (10,828) (217) - (14,802) (38,913) - (92,112) Payments to Gratuity Fund (45,300) ------(45,300) Net Cash Flows from Operating Activities (Note A) 524,789 6,708,620 67,636 68,973 (67,540) 97,074 - 7,399,551
Cash Flows from Investing Activities Investment in Subsidiary,net of cash acquired (39,344) ------(39,344) Acqusition of Investment Property - (22,400) - - - - - (22,400) Acqusition of Liquid Investments - - - - - (Other than Cash Equivalents) (27,401,828) (111,545,749) - - - - - (138,947,576) Acqusition of Other Investments - - - - - ( Other than Cash Equivalents) (338,674) (193,123) (69,557) - - - - (601,354) Proceeds from Sale of Liquid Investments - (Other than Cash Equivalents) 26,957,672 105,307,360 - - 116,807 664 - 132,382,503 Proceeds from Sale of Other Investments - (Other than Cash Equivalents) 375,364 191,137 - (24,307) - - - 542,194 Acqusition of Property , Plant & Equipment (171,227) (415,901) (978) (164) (837) (39,349) - (628,456) Acqusition of Intangible Assets - (5,409) - - - - - (5,409) REREPO Borrowings (net) 140,313 122,352 - - - - - 262,665 Proceeds from sale of Investment Property 13,699 ------13,699 Proceeds from Disposal of Property , Plant & Equipment 25,114 16,144 600 - - 4,871 - 46,729 Net Cash Flows from Investing Activities (438,911) (6,545,589) (69,935) (24,471) 115,970 (33,814) - (6,996,749)
Cash Flows from Financing Activities Term loan - - - (42,927) - (49,656) - (92,583) Proceeds from Issues of Shares - - - - 65,760 - - 65,760 Dividends Paid to parent Company Share Holders (71,821) (60,250) - - - - - (132,071) Net Cash Flows from Financing Activities (71,821) (60,250) - (42,927) 65,760 (49,656) - (158,894) Increase / (Decrease ) in Cash and cash Equivalents (Note B) 14,057 102,781 (2,299) 1,575 114,190 13,604 - 243,908
Notes to the Cash Flow Statement Note A Reconciliation of Profit from operations with Net Cash Flows from Operating Activities Profit from Operations 370,339 601,823 19,340 2,529 15,329 142,447 - 1,151,810 Adjustments for: Depreciation 161,548 137,717 46,850 673 851 29,932 - 377,571 Amortisation of Intangible Assets 57,791 - - - - - 57,791 Change in Trade and Other Receivables 163,018 172,299 5,465 51,481 193,855 (73,204) - 512,914 Change in Reinsurance Receivable (429,793) 43,470 - - 524,328 - - 138,005 Increase in Life Insurance Funds - 5,430,771 - - - - - 5,430,771 Increase in Non - Life Insurance Provisions 685,924 - - - (537,972) - - 147,952 Change in Trade and Other Payables (136,431) 93,246 (1,016) 17,081 (249,129) 41,821 - (234,428) Gain on sale of Property, Plant & Equipment (12,370) (7,433) (309) - - (4,871) - (24,983)
Gain on sale of Investments (88,247) - - - - - (88,247) Provision for fall in value of Investments (31,151) 189,764 - - - - - 158,613 Income tax Paid (130,696) - (2,477) (2,791) - (138) - (136,105) Interest Paid (27,352) (10,828) (217) - (14,802) (38,913) - (92,112) Net Cash Flows from Operating Activities 524,789 6,708,620 67,636 68,973 (67,540) 97,074 - 7,399,551 - Note B Cash and Cash Equivalents at 1st January 158,928 (68,809) (3,089) 1,796 35,168 8,366 - 132,360 Cash and Cash Equivalents at 31st December 172,985 33,972 (5,388) 3,371 149,358 21,970 - 376,268 Increase / (Decrease) in Cash and Cash Equivalents 14,057 102,781 (2,299) 1,575 114,190 13,604 - 243,908
Ceylinco Insurance PLC 143 Annual Report 2011 Supplementary Balance Sheet - Life
As at 31st December, Note Page No. 2011 2010 Rs. ‘000 Rs. ‘000
Assets Investments 1 145 36,513,083 26,861,634 Investments Pertaining to Shareholders 1.1 147 1,425,660 1,289,015 Investment Property 2 149 1,809,686 1,224,985 Investment Property Pertaining to Shareholders 2.1 149 259,120 - Intangible Assets Pertaining to Shareholders 3 149 36,808 82,696 Property, Plant & Equipment 4 150 3,009,445 3,090,739 Property, Plant & Equipment Pertaining to Shareholders 4.1 150 392,288 - Loans to Life Policyholders 771,905 698,071 Reinsurance Receivable 23,857 72,022 Deferred Tax Asset - 150,000 Deferred Tax Asset Pertaining to Shareholders 335,564 270,628 Other Assets 5 150 2,043,734 1,747,412 Other Assets pertaining to Shareholders 5.1 151 1,126,628 1,227,789 Cash and Cash Equivalents 498,533 226,424 Cash and Cash Equivalents to Shareholders 210 14,202 Total Assets 48,246,521 36,955,617
Stated Capital 6 151 358,752 358,752
Retained Earnings Pertaining to Shareholders Retained Earnings 7 151 3,155,411 2,525,581 3,514,163 2,884,333 Reserves Revaluation Reserve 1,025,139 191,190 Revaluation Reserve Pertaining to Shareholders 62,118 -
Liabilities Insurance Provision - Life 38,203,473 31,868,141 Unit Linked Fund 146,659 115,269 Obligation to Repurchase Securities 3,591,822 541,414 Reinsurance Payable 27,142 147,555 Agency Commission Payable 137,605 132,258 Policyholders’ Advance Payments 281,193 252,892 Other Liabilities 8 151 725,339 615,911 Bank overdraft 531,868 206,654 Total Liabilities 43,645,101 33,880,094 Shareholders’ Equity & Liabilities 48,246,521 36,955,617
The related notes are on pages 145 - 151.
Ceylinco Insurance PLC 144 Annual Report 2011 Notes to the Supplementary Balance Sheet - Life
1. Investments 2011 2010 Note Rs.’000 Rs.’000
Government Seecurities - Treasury Bills 4,140 245,947 -Treasury Bonds 16,175,799 11,565,298 - Repo Investments 103,822 21,199 Debentures - Quoted 1.(a) 1,286,740 1,709,044 - Unquoted 1.(b) 975,000 450,000 Term Deposits 17,605,359 12,535,711 Equity Shares Long Term Investments - Quoted 1.(c) 51,728 134,435 Long Term Investments -Unquoted 1.(d) 200,000 200,000 Short Term Investments -Quoted 1.(e) 110,495 - 36,513,083 26,861,634
1(a) Debentures - Quoted 2011 2010 Cost Market Value Redeemable on Rs.’000 Rs.’000 Rs.’000 Bank of Ceylon Unsecured 11.5% 28.06.2015 500,000 500,000 500,000 Urban Development Authority Secured 11% 05.10.2015 43,570 43,570 43570 Seylan Bank PLC. Unsecured 13% 12.07.2011 - - 625 Seylan Bank PLC. Unsecured 15.75% 29.05.2012 1,279 1279 810 Seylan Bank PLC. Unsecured 16.75% 29.05.2012 1,775 1775 976 Hatton National Bank PLC. 14.5% 10.09.2012 966 966 966 Commercial Bank of Ceylon PLC - Unsecured 13.5% 18.12.2011 - - 500,000 Seylan Merchant Bank Unsecured 17% 08.12.2016 10,000 10,000 10,000 Hatton National Bank PLC. 16% Unsecured 31.12.2017 500,000 500,000 500,000 Seylan Bank PLC.% Unsecured 21.5% 23.12.2013 24,000 24,000 30,000 Seylan Bank PLC.% Unsecured 21.5% 23.12.2013 77,510 77,510 71,510 Seylan Bank PLC.18% Unsecured 09.12.2012 50,000 50,000 50,587 Seylan Bank PLC.16.75% 29.05.2012 50 50 - Seylan Bank PLC.18% 09.12.2012 114 114 - Seylan Bank PLC.16.75% 29.05.2012 205 205 - Seylan Bank PLC 15.5% 28.06.2015 50 50 - Seylan Bank PLC 18% 09.12.2012 748 748 - Seylan Bank PLC 17% 09.12.2012 1,055 1,055 - DFCC Vardhana Bank Unsecured 11.5% 07.09.2016 74,074 74,074 - Seylan Bank PLC 21.5% 11.01.2014 1,019 1,019 - Seylan Bank PLC 20.5% 11.01.2014 61 61 - Sampath Bank PLC 15.5% 29.08.2012 264 264 - 1,286,740 1,286,740 1,709,044
1 (b) Debentures -Unquoted Citizens Development Business Finance PLC.Unsecured 12.5% 30.06.2013 62,500 62,500 Citizens Development Business Finance PLC.Unsecured 12.5% 31.12.2013 62,500 62,500 Citizens Development Business Finance PLC.Unsecured 12.5% 30.06.2014 62,500 62,500 Citizens Development Business Finance PLC.Unsecured 12.5% 30.12.2014 62,500 62,500 Nation Trust Bank PLC Unsecured 11.5% 28.08.2016 275,000 - Central Finance PLC Unsecured 11.03% 03.03.2016 250,000 - Seylan Bank PLC Unsecured 11% 07.12.2015 200,000 200,000 975,000 450,000
Ceylinco Insurance PLC 145 Annual Report 2011 Notes to the Supplementary Balance Sheet - Life
1. (c) Long Term Investments - Quoted 2011 2010 No. of Market No. of Cost Market Shares Cost Value Shares Value Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Bank, Finance & Insurance Citizens Development Business Finance PLC 2,310,496 42,987 150,182 12,546,249 125,463 657,423 Seylan Bank PLC. 3,190 3 219 - - - The Finance Company PLC - - 4,480 70 174 42,990 150,401 125,533 657,597
Land & Property Ceylinco Seylan Development PLC. - - 138,100 741 2,320 - 741 2,320
Manufacturing Blue Diamonds Jewellery Worldwide PLC. 2,400,300 8,738 19,442 2,400,300 8,738 8,161 Provision for fall in value of Investments - - (577) - 8,738 19,442 8,161 8,161 51,728 169,843 134,435 668,078
1. (d) Long Term Investments -Unquoted 2011 2010 No. of Cost No. of Cost Shares Rs.’000 Shares Rs.’000
Serene Resorts Ltd 1,500,000 15,000 1,500,000 15,000 Ceylinco Seraka Ltd 2,500 25 2,500 25 Ceylinco Healthcare Service Ltd 20,000,000 200,000 20,000,000 200,000 215,025 215,025 Provision for fall in value of Investments in Serene Resorts Ltd (15,000) (15,000) in Ceylinco Seraka Ltd. (25) (25) (15,025) (15,025)
200,000 200,000
Ceylinco Insurance PLC 146 Annual Report 2011 1. (e) Short Term Investments -Quoted No. of No. of Cost Market Cost Market Shares Shares Value Value 2011 2010 2011 2011 2010 2010 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
John Keels Holdings PLC 164,266 - 36,298 28,089 - - Chemical Industries Colombo PLC (Non-voting) 240,000 - 26,605 18,480 - - Commercial Bank of Ceylon PLC - Voting 621,270 - 85,284 62,127 - - Commercial Bank of Ceylon PLC - Non Voting 22,000 - 2,108 1,639 - - National Development Bank PLC 100 - 15 14 - - DFCC Bank PLC 100 - 15 11 - - Chevron Lubricant Lanka PLC 100 - 16 17 - - Tokyo Cement Company PLC - Voting 100 - 4 4 - - Dipped Product PLC 100 - 10 10 - - Aitken Spence PLC 100 - 15 12 - - Hemas Holdings PLC 100 - 4 3 - - Kotagala Plantation PLC 100 - 14 6 - - Dialog Asiata PLC 100 - 1 1 - - Royal Palms Beach Hotels PLC 100 - 8 7 - - Asiri Surgical Hospital Holdings PLC 100 - 1 1 - - Ceylon Hospital PLC 100 - 10 9 - - Kotmale Holdings PLC 100 - 5 5 - - Hayleys PLC 100 - 39 38 - - Central Finance PLC 100 - 28 20 - - Tokyo Cement Company PLC - Non Voting 100 - 5 3 - - 150,484 110,495 - - Provision for fall in value of Investments (39,989) - - - 110,495 110,495 - -
1.1. Investments Pertaining to Shareholders 2011 2010 Rs.’000 Rs.’000
Government Securities - Treasury Bonds 228,577 485,649 - Repo Investments - 10,215 Promissory Notes - 50,000 Term Deposits 304,450 79,453 Long Term Investments - Unquoted (Note 1.1 (a)) 463,698 463,698 Long Term Investments - Quoted (Note 1.1.(b) 228,935 - Debentures - ( Note 1.1( c) ) 200,000 200,000 1,425,660 1,289,015
Ceylinco Insurance PLC 147 Annual Report 2011 Notes to the Supplementary Balance Sheet - Life
1.1 (a) Long Term Investments -Unquoted 2011 2010 No. of Cost No. of Cost Shares Rs.’000 Shares Rs.’000
Ceylinco Building Society Ltd. 22,000 11,000 22,000 11,000 MBSL Savings Bank (Pvt) Ltd. 3,729,166 37,292 3,729,166 37,292 CEG Education Holdings (Pvt) Ltd. 252,500 2,525 252,500 2,525 Ceylinco Tourist Hotels Ltd. - - 153,972 26,750 Ceylinco Foliage Export (Pvt) Ltd. 600,000 6,000 600,000 6,000 Ceylinco Hotels Ltd. 475,000 4,750 475,000 4,750 Ceylinco Cellular Communication (Pvt) Ltd. 100,000 1,000 100,000 1,000 South Asian Travels Ltd. 500,000 5,000 500,000 5,000 Ceylinco Seraka Ltd 2,500 25 2,500 25 Ceylinco Healthcare Service Ltd 32,100,000 321,000 32,100,000 321,000 388,592 415,342 Provision for fall in value of Investments 1.1 (a)1 (65,878) (92,628) 322,714 322,714
2011 2010 Cost Cost Rs.’000 Rs.’000
1.1(a)(1) Provision for fall in value of Investments Ceylinco Seraka Ltd (25) (25) CEG Education Holdings (Pvt) Ltd. (2,525) (2,525) Ceylinco Foliage Export (Pvt) Ltd. (6,000) (6,000) Ceylinco Building Society Ltd. (11,000) (11,000) Ceylinco Tourist Hotels Ltd. - (26,750) Ceylinco Hotels Ltd. (4,750) (4,750) MBSL Savings Bank Ltd. (35,578) (35,578) Ceylinco Cellular Communication (Pvt) Ltd. (1,000) (1,000) South Asian Travels Ltd. (5,000) (5,000) (65,878) (92,628)
Preference Shares Middleway Ltd . 10% 792,500 7,925 792,500 7,925 Castle Realty Pvt Ltd. 131,885,875 131,886 131,885,875 131,886 Seylan Bank PLC. 1,064,950 9,098 1,064,950 9,098 148,909 148,909 Provision for fall in value of Investments in Middleway Ltd. (7,925) (7,925) 140,984 140,984 Total 463,698 463,698
No.of Market Cost Shares Value (Rs.’000) (Rs.’000)
1.1 (b) Long Term Investments -Quoted shares Citizen Development Business Finance PLC -Voting 12,327,289 864,143 228,935 Total 864,143 228,935
Ceylinco Insurance PLC 148 Annual Report 2011 1.1 (c) Debentures Redeemable on 2011 2010 Quoted Cost Cost Rs.’000 Rs.’000
The Finance Company PLC. Unsecured 09.01.2012 200,000 200,000 (Redeemable - 14%) 200,000 200,000
2. Investment Property 2011 2010 Rs.’000 Rs.’000
At the beginning of the year 1,224,985 1,261,939 Additions 408,890 22,399 Changes in Fair Value 184,001 - Transfer during the year (8,190) (59,353) At the end of the year 1,809,686 1,224,985
2.1. Investment Property pertaining to Shareholders 2011 2010 Rs.’000 Rs.’000
At the beginning of the year - - Changes in Fair value 62,118 - Transfer during the year 197,002 - At the end of the year 259,120 -
3 Intangible Assets Pertaining to Shareholders Acquisition Cost Balance as at 1st January 270,757 265,347 Additions 6,468 5,410 Balance as at 31st December 277,225 270,757
Amortisation Balance as at 1st January 188,061 130,270 Amortisation charged for the year 52,356 57,791 Balance as at 31st December 240,417 188,061
Carrying Amount as at 31st December 36,808 82,696
Intangible assets consist of operating software system and P.D.A. phones software purchased and are amortised over the period of 5 years.
Ceylinco Insurance PLC 149 Annual Report 2011 Notes to the Supplementary Balance Sheet - Life
4. Property, Plant & Equipment Long Term As at Additions Revaluation Disposals / As at 01.01.2011 Transfers 31.12.2011 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Cost / Valuation Freehold Land 909,307 179,399 672,261 307,249 1,453,718 Buildings 1,712,968 81,172 38,243 678,730 1,153,653 Motor Vehicles 303,243 42,108 - 345,351 - Office Equipment 336,282 31,211 - 25,999 341,494 Computer Equipment 444,352 24,558 - 18,120 450,790 Furniture & Fittings 222,160 19,996 - 3,093 239,063 3,928,312 378,444 710,504 1,378,542 3,638,718
As at Charge Adjustment Disposals / As at 01.01.2011 for the year on Transfers 31.12.2011 Revaluation Rs.’000 Rs.’000 Rs.’000 Rs.’000 Depreciation Buildings 115,003 34,482 104,824 44,661 - Motor Vehicles 121,275 36,087 - 157,362 - Office Equipment 119,564 34,359 - 18,559 135,364 Computer Equipment 376,955 24,321 - 17,799 383,477 Furniture & Fittings 108,567 20,299 - 2,456 126,410 841,364 149,548 104,824 240,837 645,251 Capital Work In Progress 3,791 15,978 Carrying Amount 3,090,739 3,009,445
4.1 Property, Plant & Equipment Pertaining to Shareholders Additions/ As at Transfers Revaluation Disposals / As at 01.01.2011 Transfers 31.12.2011 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Leasehold Land - 5,589 - - 5,589 Buildings - 214,437 - - 214,437 Motor Vehicles - 172,262 - - 172,262 Carrying Amount - 392,288 - - 392,288
5. Other Assets 2011 2010 Rs.’000 Rs.’000 Advances, Deposits & Prepayments 43,246 50,050 WithholdingTax Receivables 30,450 - Inventory 35,974 35,194 Interest Income Receivable 1,869,591 1,662,168 Amount Due from Non Life Division 64,473 - 2,043,734 1,747,412
Ceylinco Insurance PLC 150 Annual Report 2011 5.1 Other Assets Pertaining to Shareholders 2011 2010 Rs.’000 Rs.’000 Tax Receivable (5.1(a) 689,810 619,396 Staff Loans ( Note 5.1( b)) 191,531 212,244 Vehicle Loans (Note 5 .1 (c)) 218,824 258,705 Ciesot (Pvt) Ltd.(Note 5.1(d)) - 92,742 Amount Due from Non Life Division 11,401 36,181 Interest Income Receivables 15,062 8,521 1,126,628 1,227,789
5.1(a) Tax Receivable Notional Tax WHT 2011 2010 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Tax Receivable 1,043,170 35,192 1,078,362 1,007,948 Tax Suspense account (364,719) (23,833) (388,552) (388,552) 678,451 11,359 689,810 619,396
5.1(b) Staff Loans 2011 2010 Rs.’000 Rs.’000 At the beginning of the year 212,244 217,865 Loans Granted during the year 112,411 112,645 Repayments during the year (133,124) (118,266) At the end of the year 191,531 212,244
5.1(c) Vehicle loans At the beginning of the Year 258,705 280,489 Loans Granted during the year 57,081 39,056 Repayments during the year (96,962) (60,840) At the end of the year 218,824 258,705
5.1(d) Ciesot (Pvt.) Limited was incorporated in the year 2000 for the sole purpose of acting as trustee of the trust fund established by Ceylinco Insurance PLC (CIPLC). The trustee holds the shares of CIPLC on behalf and for the exclusive benefit of the employees of CIPLC. The above amount represents the advances given by the Life division to Ciesot (Pvt) Ltd. to purchase the above mentioned shares. During the year under review, above amount was settled in full. 6 Ordinary Shares - Non - Voting At the Beginning of the year 358,752 358,752 Issued during the year - - 358,752 358,752 7. Retained Earnings At the Beginning of the year 2,525,581 1,994,835 Transfer during the year 696,105 590,996 Dividend paid (66,275) (60,250) At the end of the year 3,155,411 2,525,581
8. Other Liabilities Trade and Other Creditors 618,448 506,085 Amounts due to Related Companies (Note 8 (a)) 37,155 37,155 Death Claims payable 69,736 72,671 725,339 615,911 8 (a) Amounts due to Related Companies Ceylinco Limited 57,103 57,103 Less - Interest in Suspense (19,948) (19,948) 37,155 37,155
Ceylinco Insurance PLC 151 Annual Report 2011 Notes to the Financial Statements
1.1 Corporate Information 1.2 Basis of Preparation
1.1.1 General 1.2.1 Statement of Compliance Ceylinco Insurance Company PLC (the The consolidated and separate financial Company) is a public limited liability company statements have been prepared in accordance incorporated and domiciled in Sri Lanka and with Sri Lanka Accounting Standards (SLAS), listed on the Colombo Stock Exchange. The and the requirements of the Companies Act registered office of the Company is located at 69, No. 07 of 2007 and the Regulation of Insurance Janadhipathi Mawatha, Colombo 1.The main Industry Act No. 43 of 2000 and Regulation of places of business of Life Insurance is located Insurance Industry (Amendment) Act No. 03 fo at “Ceylinco Life Tower” 106, Havelock Road, 2011. The formats and disclosures are also in Colombo 05 and the main place of business of accordance with the Statement of Recommended General Insurance is located at “Ceylinco House” Practice for Insurance Contracts (SORP), adopted 69, Janadhipathi Mawatha, Colombo 1. The by the Institute of Chartered Accountants of Sri additional corporate information is given on Lanka (ICASL). page 6-7. 1.2.2 Basis of Measurement In the annual report of the Board of Directors The financial statements have been prepared on and in the financial statements, “the Company” the historical cost basis except for the following: refers to Ceylinco Insurance PLC as the holding company and “the Group” refers to s )NVESTMENT PROPERTY IS MEASURED AT FAIR VALUE the companies whose accounts have been consolidated therein. s ,AND AND BUILDINGS ARE STATED AT REVALUED amounts
All companies in the Group are limited liability s .OTIONAL 4AX #REDIT IS MEASURED AT PRESENT Companies incorporated and domiciled in value Sri Lanka except one subsidiary which is incorporated and domiciled in the Republic of 1.2.3 Functional and Presentation Currency Maldives. These financial statements are presented in Sri Lankan Rupees, which is the Company’s 1.1.2 Principal Activities and Nature of Operations functional currency. All financial information During the year, the principal activities of the presented in Sri Lankan Rupees rounded to the Company and the other group companies were nearest thousand. underwriting of all classes of General insurance, Life Insurance, Healthcare Services, Fund 1.2.4 Use of Judgments ,Estimates and Management, Power Generation and Education Assumptions services. The preparation of financial statements in conformity with Sri Lanka Accounting Standards 1.1.3 Ultimate Parent Company (SLASs) requires management to make The Company has no identified parent Company. judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and 1.1.4 Date of Authorization for issue expenses. Actual results may differ from these The Consolidated Financial Statements of estimates. Ceylinco Insurance PLC for the year ended 31 December 2011 was authorized for issue in Estimates and underlying assumptions are accordance with a resolution of the Board of based on historical experience and various other Directors on 23rd February 2012. factors that are believed to be reasonable under the circumstances, the results of which form the
Ceylinco Insurance PLC 152 Annual Report 2011 basis of making the judgments about the carrying insurance fund. The statement of income reflects amount of assets and liabilities that are not the underwriting results and investment and readily apparent from other sources. other income of the general insurance business as well as the results of the life insurance business. Estimates and underlying assumptions are The results of the subsidiaries are included in the reviewed on an ongoing basis. Revisions to consolidated income statement. accounting estimates are recognised in the period in which the estimates are revised and in any a. Basis of Consolidation future periods affected. (i) Subsidiaries Information about significant areas of estimation Subsidiaries are entities controlled by the uncertainty and critical judgements in applying Group. Control exists when the Group accounting policies that have the most significant has the power to govern the financial and effect on the amounts recognized in the financial operating policies of an entity so as to obtain statements is included in the following notes: benefits from its activities. In assessing control, potential voting rights that are Critical Accounting Judgment, Disclosure currently exercisable are taken into account. Estimates and Assumptions Reference The financial statements of subsidiaries Note Page are included in the consolidated financial statements from the date that control Impairment of assets (Income Tax) 10 (d) 184 commences until the date that control ceases. Unearned premium and deferred acquisition cost 12 (a) 186 ii) Associates(equity accounted investees) Insurance provision - Life 11 185 Associates are those entities in which the Group has significant influence, but not Reserve for gross outstanding 12 (c) 186 control, over the financial and operating claims policies. Significant influence is presumed to Valuation of investment property 3 (a) 173 exist when the Group holds between 20 and 50 percent of the voting power of another Deferred tax -utilization entity. Associates are accounted for using the of tax losses 24 (3) 193 equity method (equity accounted investees) Measurement of defined and are initially recognized at cost. benefit obligation 32 200 The Group’s investment includes goodwill Consolidation of subsidiary identified on acquisition, net of any - Castle Realty (Pvt) Ltd 4.2.(b) 176 accumulated impairment losses. The 1.3 Significant Accounting Policies consolidated financial statements include the Group’s share of the income and expenses The accounting policies set out below have been and equity movements of equity accounted applied consistently to all periods presented in investees, after adjustments to align the these consolidated financial statements, and have accounting policies with those of the Group, been applied consistently by Group entities. from the date that significant influence commences until the date that significant The company balance sheet represents the influence ceases. assets, liabilities and equity of the shareholders. The consolidated balance sheet includes the assets and liabilities of the company and its subsidiaries. The life insurance balance sheet presented as supplemental information on page 144, represents assets and liabilities of the life
Ceylinco Insurance PLC 153 Annual Report 2011 Notes to the Financial Statements
When the Group’s share of losses exceeds its payments during the period and the cost in interest in an equity accounted investee, the foreign currency translated at the exchange carrying amount of that interest (including rate at the end of the period. Foreign any long-term investments) is reduced to currency differences arising on retranslation nil and the recognition of further losses are recognized in profit or loss is discontinued except to the extent that the Group has an obligation or has made (ii) Foreign Operations payments on behalf of the investee. The assets and liabilities of foreign operations are translated to Rupees at exchange rates at (iii) Joint venture the reporting date. The income and expenses A joint venture is a contractual arrangement, of foreign operations are translated to whereby the Group and other parties Rupees at exchange rates at the dates of the undertake an economic activity that is subject transactions. Foreign currency differences to joint control. The Group recognizes are recognized directly in equity under its interest in the joint venture using the foreign currency translation reserve (FCTR). proportionate consolidation method. The When a foreign operation is disposed of, in Group’s share of the each of the asset, part or in full, the relevant amount in the liabilities, income and expense of the joint FCTR is transferred to profit or loss. Foreign venture are combined with the similar items, exchange gains and losses arising from a line by line, in the consolidated financial monetary item receivable from or payable to a statements. foreign operation, the settlement of which is neither planned nor likely in the foreseeable (iv) Transactions Eliminated on Consolidation future, are considered to form part of a net Intra-group balances and transactions, and investment in a foreign operation and are any unrealized income and expenses arising recognized directly in equity in the FCTR. from intra-group transactions, are eliminated in preparing the consolidated financial c. Financial Year statements. Unrealized gains arising from The Consolidated Financial Statements transactions with equity accounted investees incorporating all subsidiaries and joint are eliminated against the investment to the venture in the Group are prepared to extent of the Group’s interest in the investee. a common financial year ending 31st Unrealized losses are eliminated in the same December. In the case where the reporting way as unrealized gains, but only to the extent dates are different from the Group reporting that there is no evidence of impairment. dates, adjustments are made for any significant transactions or events up to 31st b. Foreign Currency December.
(i) Foreign Currency Transactions d. Segment Reporting Transactions in foreign currencies are A segment is a distinguishable component of translated to the functional currency of the Group that is engaged either in providing Group entities at exchange rates at the dates related products or services (business of the transactions. Monetary assets and segment), or in providing products or services liabilities denominated in foreign currencies within a particular economic environment at the reporting date are retranslated to the (geographical segment), which is subject to functional currency at the exchange rate risks and returns that are different from those at that date. The foreign currency gain or of other segments. The Group’s primary loss on monetary items is the difference format for segment reporting is based on between the cost in the functional currency business segments. The business segments at the beginning of the period adjusted for
Ceylinco Insurance PLC 154 Annual Report 2011 are determined based on the Group’s investment. Short term investments are management and internal reporting structure. measured at lower of cost and market value on an aggregate portfolio basis. Inter-segment pricing is determined on an arm’s length basis. f. Investment Properties Investment property is property held either to Segment results, assets and liabilities include earn rental income or for capital appreciation items directly attributable to a segment or for both, but not for sale in the ordinary as well as those that can be allocated on a course of business, or for administrative reasonable basis. purposes. Investment property is measured at The activities of the Group are located mainly fair value with any change therein recognised in Sri Lanka. Consequently, the economic in profit or loss. environment in which the Group operated When the use of a property changes such is not subject to risks and rewards that are that it is reclassified as property, plant significantly different on a geographical basis. and equipment, its fair value at the date Hence disclosure by geographical region is of reclassification becomes its cost for not provided. subsequent accounting e. Investments An external, independent valuation company, (i) Investments in Government Securities having appropriate recognized professional Investments in Treasury Bills and Treasury qualifications and recent experience in the Bonds are stated at cost and interest income location and category of property being accrued up to the year end. The premium/ valued, values the Group’s investment discount arising from treasury bond is property portfolio every 3 years. The fair systematically amortised to/recognized in the values are based on market values, being the statement of income throughout the period estimated amount for which a property could upto maturity. be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper (ii) Securities Purchased under Re-sale marketing wherein the parties had each Agreements acted knowledgeably, prudently and without These are advances collateralized by compulsion. purchased treasury bills and treasury bonds subject to an agreement to re-sell them g. Investment in Subsidiaries at a predetermined price. Such securities remain on the balance sheet of the company Investments in Subsidiaries are treated as and the asset is recorded in respect of the long - term investments and valued at cost in consideration paid and interest accrued separate financial statements of the Company. thereon. Provision for diminution in value is made when in the opinion of the Directors (iii) Investment in Shares and Debt that there has been a decline other than Instruments temporary in the value of the investment. Debt instruments, quoted and unquoted investments are held on a long term basis and are stated at cost. Provision for diminution in value is made when in the opinion of the Directors that there has been a decline, other than temporary, in the value of the
Ceylinco Insurance PLC 155 Annual Report 2011 Notes to the Financial Statements
h. Intangible Assets Cost includes expenditure that is directly attributable to the acquisition of the asset. (i) Goodwill The cost of self-constructed assets includes Goodwill acquired in a business combination the cost of materials and direct labour, any is initially measured at cost being the excess other costs directly attributable to bringing of the cost of the business combination the asset to a working condition for its over the Group’s interest in the net fair intended use, and the costs of dismantling value of the identifiable assets, liabilities and removing the items and restoring the and contingent liabilities. Following initial site on which they are located. Purchased recognition, goodwill is measured at cost less software that is integral to the functionality any accumulated impairment losses. Goodwill of the related equipment is capitalised as part is reviewed for impairment, annually or of that equipment. Borrowing costs related to more frequently if event or changes in the acquisition or constructions of qualifying circumstances indicate that the carrying value assets are capitalised. may be impaired. When parts of an item of property, plant (ii) Other Intangible Assets and equipment have different useful lives, These are acquired/incurred by the Group, they are accounted for as separate items which have finite useful lives, are measured (major components) of property, plant and at cost less accumulated amortisation and equipment. Gains and losses on disposal of accumulated impairment losses. an item of property, plant and equipment are determined by comparing the proceeds (iii) Subsequent Expenditure from disposal with the carrying amount of property, plant and equipment, and are Subsequent expenditure is capitalised only recognised net within “other income” in when it increases the future economic profit or loss. When revalued assets are sold, benefits embodied in the specific asset the amounts included in the revaluation to which it relates. All other expenditure, surplus reserve are transferred to retained including expenditure on internally generated earnings. goodwill and brands, is recognised in profit or loss as incurred. (ii) Reclassification to Investment Property
(iv) Amortisation Property that is being constructed for future use as investment property is accounted Amortisation is recognised in profit or loss for as property, plant and equipment until on a straight-line basis over the estimated construction or development is complete, useful lives of intangible assets from the date at which time it is remeasured to fair value that they are available for use. The estimated and reclassified as investment property. Any useful life for the current and comparative gain or loss arising on remeasurement is periods is as follows: recognised in profit or loss. Item Useful Life When the use of a property changes from Computer software 03 - 05 Years owner-occupied to investment property, the property is remeasured to fair value and i. Property, Plant and Equipment reclassified as investment property. Any gain (i) Recognition and Measurement arising on remeasurement is recognized directly in equity. Any loss is recognized Items of property, plant and equipment is immediately in profit or loss. stated at cost or valuation less accumulated depreciation.
Ceylinco Insurance PLC 156 Annual Report 2011 (iii) Subsequent Costs The revaluation surplus is recognized on The cost of replacing part of an item of the net carrying value of the asset and is property, plant and equipment is recognised transferred to a revaluation reserve after in the carrying amount of the item if it is restating the asset at the revalued amount. probable that the future economic benefits The revaluation reserve is transferred to embodied within the part will flow to the revenue reserve at the point of derecognition. Group and its cost can be measured reliably. The carrying amount of the replaced part is (vi) De-recognition derecognised. The costs of the day-to-day An item of property, plant and equipment servicing of property, plant and equipment is de-recognised upon disposal or when are recognised in profit or loss as incurred. no future economic benefits are expected from its use. Any gain or loss arising on (iv) Depreciation derecognition of the asset (calculated as the Depreciation is recognized in profit or loss on difference between the net disposal proceeds a straight-line basis over the estimated useful and the carrying amount of the asset) is lives of each part of an item of property, plant recognised in profit and loss in the year the and equipment. Land is not depreciated. asset is de-recognised.
The estimated useful lives for the current and j. Leased Assets comparative periods are as follows: Leases in terms of which the Group assumes substantially all the risks and rewards of Item Useful Life ownership are classified as finance leases. Buildings 50-70 Years Upon initial recognition the leased asset is measured at an amount equal to the lower Improvement on leasehold of its fair value and the present value of the Building 04-06 Years minimum lease payments. Subsequent to Furniture and Fittings 05-10 Years initial recognition, the asset is accounted for Office Equipment 03-10 Years in accordance with the accounting policy Computer Equipment 02-05 Years applicable to that asset. Motor Vehicles 04-05 Years Leases, where the lessor effectively retains Plant & Machinery/Project substantially all of the risks and benefits of Equipment 4-33 Years ownership over the term of the lease, are Civil Construction 57-60 Years classified as operating leases. Medical Equipments 05 Years Lease payments are recognized as an expense Electric Equipment 05 Years in the income statement over the term of the Depreciation methods, useful lives and residual lease. values are reviewed at each reporting date. k. Reinsurance Receivable (v) Revaluations Reinsurance assets include the balances Revaluation is performed on freehold land due from both insurance and reinsurance and building by professionally qualified companies for paid and unpaid losses valuers using the Investment method. Land and loss adjustment expenses. Amounts and buildings are revalued in every three recoverable from reinsurers are estimated years. in a manner consistent with the claim
Ceylinco Insurance PLC 157 Annual Report 2011 Notes to the Financial Statements
liability associated with the reinsurance property inventories and deferred tax assets policy. Reinsurance is recorded gross in the are reviewed at each reporting date to consolidated balance sheet unless a right to determine whether there is any indication offset exists. of impairment. If any such indication exists, then the asset’s recoverable amount is If a reinsurance asset is impaired, the estimated. company reduces the carrying amount accordingly and is recognized in profit or The recoverable amount of an asset or cash- loss. A reinsurance asset is impaired if there is generating unit is the greater of its value objective evidence, as a result of an event that in use and its fair value less costs to sell. In occurred after the initial recognition of the assessing value in use, the estimated future reinsurance asset, that the company may not cash flows are discounted to their present receive all amounts due to it under the terms value using a pre-tax discount rate that of the contract, and the event has a reliably reflects current market assessments of the measurable impact on the amount that the time value of money and the risks specific to company will receive from the re-insurer. the asset.
An impairment loss is recognised if the l. Premium Receivable carrying amount of an asset or its cash- Collectibility of premiums and other debtors generating unit exceeds its estimated is reviewed on an ongoing basis. Debtors that recoverable amount. Impairment losses are are known to be uncollectible are written off. recognised in profit or loss. A provision for doubtful debts is raised when some doubt as to collection exists. An impairment loss in respect of goodwill is not reversed. In respect of other assets, m. Inventories impairment losses recognised in prior periods are assessed at each reporting date for any Inventories include all consumable items and indications that the loss has decreased or no are measured at the lower of cost and net longer exists. An impairment loss is reversed realisable value. Cost is generally determined if there has been a change in the estimates by reference to weighted average cost. Net used to determine the recoverable amount. realizable value is the estimated market price An impairment loss is reversed only to the in the ordinary course of business less any extent that the asset’s carrying amount does estimated expense to purchases. not exceed the carrying amount that would have been determined, net of depreciation or The cost incurred in bringing inventories amortisation, if no impairment loss had been to its present location and condition is recognised. accounted using the following cost formula.
Stationery p. Cash and Cash Equivalents Course Materials First in First out Basis Cash and cash equivalents comprise cash Books } balances, and call deposits. Bank overdrafts are included in the balance sheet under n. Other Assets and Receivables liabilities.
Other assets and receivables are stated at The cash flow statement has been prepared their cost less impairment losses. using the direct method. Interest and dividend received are classified as operating o. Impairment cash flows. For cash flow purposes, cash and The carrying amounts of the Group’s non- cash equivalents are presented net of bank financial assets, other than, investment overdraft.
Ceylinco Insurance PLC 158 Annual Report 2011 q. Insurance Provision – Life are deducted. The calculation is performed The Directors agree to the life insurance annually by a qualified independent actuary provisions for the group on the using the projected unit credit method. recommendation of the actuary following annual valuation of the life insurance When the calculation results in a benefit to business. The actuarial valuation takes into the Group, the recognised asset is limited account all liabilities including contingent to the total of any unrecognised past service liabilities and is based on assumptions costs and the present value of economic recommended by the independent external benefits available in the form of any future actuary. refunds from the plan or reductions in future contributions to the plan. An economic benefit is available to the Group if it is r. Insurance Provision –Non-Life realisable during the life of the plan, or on The provision comprises of reserve for settlement of the plan liabilities. the net unearned premium, reserve for the deferred acquisition cost (net), reserve for The employee benefit liability of all other gross outstanding claims and the incurred companies in the group is based on the but not reported (IBNR) provision. Unearned gratuity formula in Appendix E of SLAS premium, deferred acquisition cost and the 16 - Employee Benefits. All assumptions are reserve for gross outstanding claims are reviewed at each reporting date. Details of the stated according to the industry practices key assumptions used in the estimates are whereas the IBNR reserve is decided by an contained in Note 32. independent external actuary to estimate the outstanding liabilities as of reporting date. (iii) Short-Term Benefits Short-term employee benefit obligations are s. Employee Benefits measured on an undiscounted basis and are (i) Defined Contribution Plans expensed as the related service is provided. A defined contribution plan is a post- A liability is recognized for the amount employment benefit plan under which an expected to be paid under short-term cash entity pays fixed contributions (%) into bonus if the Group has a present legal or a separate entity and will have no legal constructive obligation to pay this amount or constructive obligation to pay further as a result of past service provided by the amounts. Obligations for contributions to employee and the obligation can be estimated a defined contribution pension plan are reliably. recognised as an employee benefit expense in profit or loss when they are due. t. Provisions (excluding insurance contracts) A provision is recognized in the balance sheet (ii) Defined Benefit Plans when the group has a legal or constructive A defined benefit plan is a post-employment obligation as a result of a past event, and benefit plan other than a defined contribution it is probable that an outflow of economic plan. The Company’s net obligation in benefits will be required to settle the respect of defined benefit plans is calculated obligation. by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. An unrecognised past service costs and the fair value of any plan assets
Ceylinco Insurance PLC 159 Annual Report 2011 Notes to the Financial Statements
u. Income Statement Class of the Basis (i) Gross Written Premium Policy
1.) Non Life Insurance Marine 60% in the same month Gross written premium is generally 40% after three months of recognized as written upon inception of underwriting the policy the policy. Upon inception of the contract, premiums are recorded as written and are Title 60% in the same year earned primarily on a pro-rata basis over the 40% is deferred until the term of the related policy coverage. However, validity of the policy expires. for those contracts for which the period of risk differs significantly from the contract period, premiums are earned over the period Unexpected Risk of risk in proportion to the amount of Provision is made where appropriate for the insurance protection provided. estimated amount over and above unearned premiums to meet future claims and related 2.) Life Insurance expenses on the business in force as at 31st December. Premiums from life insurance contracts including participating contract and non participating contract are recognized as (iv) Revenue from Other Operations revenue when cash is received from the (a) Healthcare Segment policyholder. Income of the company comprises of two avenues i.e. from screening packages (ii) Reinsurance Premium and screening tests. All such revenue is 1.) Non Life Insurance recognized in the Statement of Income on accrual basis. Revenue is shown by netting off Reinsurance premium expense is accounted the consultancy fees for the visiting doctors. for in the same accounting period as the gross written premium to which it relates. (b) Services
2.) Life Insurance Revenue is recognised in the accounting periods in which the services are rendered Onward reinsurance premiums are recognized when payable. Reinsurance recoveries are credited to match the relevant (c) Hotel Operation gross claims. In respect of the Group’s hotel operations, apartment revenue is recognised on the (iii) Unearned Premiums – Non Life rooms occupied on a daily basis, and food & Insurance beverage sales are accounted for at the time of sale. Unearned premiums reserve represents the portion of the premium written in the year but relating to the unexpired term of (d) Power Generation coverage. Unearned premiums are calculated Revenue is recognized in the accounting on the 1/24th basis except for the Marine and period in which the power is generated. Title Policies in accordance with the Control of Insurance Regulations. (e) Education Services Revenue from rendering of services is The basis of calculating unearned premiums recognized in the period in which the services for Marine and Title Policies are as follows, are rendered.
Ceylinco Insurance PLC 160 Annual Report 2011 (v) Acquisition Costs 2.) Life Insurance
1.) Non Life Insurance Death claims are recorded on the basis of the notification received. Maturities and Annuity Acquisition costs, representing commissions, payments are recorded when due. Interim which vary with and are directly related to payments and surrenders are accounted at the production of business, are referred the time of settlement. and amortized over the period in which the related written premiums are earned. Reinsurance commission is also treated in (vii) Other Income the same manner within deferred acquisition 1.) Investment Income costs. Investment income comprises interest income on funds invested, dividend income, 2.) Life Insurance gains on the disposal of investments. Interest Commission Expense is charged to the income is recognized as it accrues in profit period in which its incurred or loss, using the effective interest method. Dividend income is recognized in profit (vi) Claims or loss on the date that the Group’s right to receive payment is established. Interest 1.) Non Life Insurance income on loans granted to life policyholders, Claims expenses and liabilities for is accounted on a cash basis outstanding claims are recognized in respect of direct and inwards reinsurance business. 2.) Rental Income The liability covers claims reported but Rental income from property is recognized in not yet paid, incurred but not reported profit or loss on a straight line basis over the claims (“IBNR”) and the anticipated direct term of the lease. Lease incentives granted, if and indirect costs of settling those claims. any, are recognized as an integral part of the Claims outstanding are assessed by review total rental income to be received. of individual claim files estimating changes in the ultimate cost of settling claim. The provision in respect of IBNR& IBNER (viii) Expenses (Incurred But Not Enough Reported) are 1.) Lease Payments actuarially valued to ensure a more realistic Payments made under operating leases are estimation of the future liability based on the recognized in profit or loss on a straight- past experience and trends. line basis over the term of the lease. Lease incentives received are recognized as an Actuarial valuation is performed on an integral part of the total lease expense, over annual basis. the term of the lease.
While the Directors consider that the Minimum lease payments made under provision for claims is fairly stated on the finance leases are apportioned between the basis of information currently available, finance expense and the reduction of the the ultimate liability will vary as a result of outstanding liability. The finance expense subsequent information and events. This is allocated to each period during the lease may result in adjustments to the amounts term so as to produce a constant periodic rate provided. Such amounts are reflected in the of interest on the remaining balance of the financial statements for estimates of that liability. period. The methods used and the estimates made are reviewed regularly.
Ceylinco Insurance PLC 161 Annual Report 2011 Notes to the Financial Statements
Contingent lease payments are accounted for differences: the initial recognition of assets by revising the minimum lease payments or liabilities in a transaction that is not over the remaining term of the lease when a business combination and that affects the lease adjustment is confirmed. neither accounting nor taxable profit or loss, and differences relating to investments in 2.) Finance Cost subsidiaries and jointly controlled entities Finance cost is recognized as expenditure in to the extent that it is probable that they the period in which are incurred. However, will not reverse in the foreseeable future. finance costs are directly attributable to the Deferred tax is measured at the tax rates acquisition, construction or production of that are expected to be applied to temporary assets that take a substantial period of time differences when they reverse, based on the to get ready for its intended use or sale, are laws that have been enacted or substantively capitalized as part of the assets. enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current 3.) Income Tax tax liabilities and assets, and they relate to Income tax expense comprises current income taxes levied by the same tax authority and deferred tax. Income tax expense is on the same taxable entity. recognised in profit or loss except to the extent that it relates to items recognised A deferred tax asset is recognized to the directly in equity, in which case it is extent that it is probable that future taxable recognised in equity. profits will be available against which the temporary difference can be utilized. Deferred Current tax is the expected tax payable on tax assets are reviewed at each reporting date the taxable income for the year, using tax and are reduced to the extent that it is no rates enacted or substantively enacted at the longer probable that the related tax benefit reporting date, and any adjustment to tax will be realized. payable in respect of previous years.
(ix) Earnings Per Share The Inland Revenue Act No. 10 of 2006 and amendments as well as relevant Board of The Group presents basic earnings per share Investment (BOI) regulations are applied in (EPS) data for its ordinary shares. Basic EPS determining the taxable income/loss of the is calculated by dividing the profit or loss Company and its subsidiaries. attributable to ordinary shareholders of the Company by the weighted average number Subsidiaries of the Company, Ceylinco of ordinary shares outstanding during the Healthcare Services(Pvt) Ltd, Ceypower period. Cascades (Pvt) Ltd, CeyHydro Developers (Pvt) Ltd, Energy Generators (Pvt) Ltd and v. Cash Flow Statement Ceylinco Insurance Company (Maldives) The cash flow statement has been prepared (Pvt) Ltd are tax exempt and tax liable under using the “direct method”. concessionary rates . Interest paid, interest received and dividend Deferred tax is recognized using the received is classified as operating cash balance sheet liability method, providing for flows, while dividends paid are classified temporary differences between the carrying as financing cash flows for the purpose of amounts of assets and liabilities for financial presenting the cash flow statement. reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary
Ceylinco Insurance PLC 162 Annual Report 2011 w. New Accounting standards issued but and a statement of comprehensive income). not effective as at balance sheet date. Components of comprehensive income are not permitted to be presented in the Ceylinco Insurance PLC will be adopting statement of changes in equity. The standard the new Sri Lanka Accounting Standards also requires the company to disclose (new SLAS) comprising of LKAS and information that enables users of its financial SLFRS applicable for financial periods statements to evaluate the entity’s objectives, commencing from 01 January 2012 as issued policies and processes for managing capital. by the Institute of Chartered Accountants The company shall also provide additional of Sri Lanka. Ceylinco Insurance PLC has disclosures on financial instruments classified commenced reviewing its accounting policies as equity instruments. and financial reporting in readiness for the transition. As the company has a 31st (c) LKAS 16 – Property Plant and Equipment December 2011 year end, priority has been requires a company to initially measure given to considering the preparation of an an item of property plant and equipment opening balance sheet in accordance with at cost, using the cash price equivalent at the new SLASs as at 01st January 2012. This the recognition date. If payment is deferred will form the basis of accounting for the new beyond normal credit terms, the difference SLASs in the future, and is required when between the cash price equivalent and the the Ceylinco Insurance PLC prepares its first total payment is recognized as interest over new SLAS compliant financial statements the period, unless such interest is capitalized for the year ending 31st December 2012. Set in accordance with LKAS 23. out below are the key areas where accounting policies will change and may have an impact All site restoration costs and other on the financial statements of the company. environmental restoration and similar costs The company is in the process of quantifying must be estimated and capitalised at initial the impact on the financial statements arising recognition, in order that such costs can be from such changes in accounting policies. depreciated over the useful life of the asset.
(a) SLFRS 1 – First Time Adoption of Sri Lanka The standard requires depreciation of Accounting Standards requires the company assets over their useful lives, where the to prepare and present opening new SLFRS residual value of assets is deducted to arrive financial statements at the date of transition at the depreciable value. It also requires to new SLAS. The company shall use the that significant components of an asset be same accounting policies in its opening new evaluated separately for depreciation. SLAS financial statements and throughout all periods presented in its first new SLAS (d) LKAS 32 – Financial Instruments: financial statements. Those accounting Presentation, LKAS 39 – Financial policies should comply with each new SLAS Instruments: Recognition and Measurement effective at the end of 31st December 2012. and SLFRS 7 – Disclosures will result in changes to the current method of recognizing (b) LKAS 1 – Presentation of Financial financial assets, financial liabilities and equity Statements requires an entity to present, in instruments. The standard will require a statement of changes in equity, all owner measurement of financial assets and financial changes in equity. All non owner changes in liabilities at fair value at initial measurement. equity are required to be presented in one The subsequent measurement of financial statement of comprehensive income or in assets classified as fair value through profit two statements (a separate income statement and loss and available for sale will be at
Ceylinco Insurance PLC 163 Annual Report 2011 Notes to the Financial Statements
fair value, with the gains and losses routed (f) SLFRS 3 – Business combinations will through the statements of comprehensive require the company to apply this standard to income and other comprehensive income transactions and other events that meet the respectively. new definition of a business ( an integrated set of assets(inputs) and activities( processes) Financial Assets classified as held to maturity which are capable of being conducted and and loans and receivables will be measured managed to provide a return) as opposed subsequently at amortized cost. These assets to a mere asset acquisition. Under the new will need to be assessed for any objective acquisition method of accounting, in addition evidence of impairment as a result of one or to recognising and measuring in its financial more events that occurred after the initial statements the identifiable assets acquired recognition of the asset (a ‘loss event’) and and liabilities assumed the standard also that loss event (or events) has an impact requires recognition and measurement of on the estimated future cash flows of the any non-controlling interest in the acquiree financial asset or group of financial assets and re-measuring to fair value any previously that can be reliably estimated. held interests which could have an impact on the recognition of goodwill. Subsequent to Financial liabilities will be either classified the acquisition of control any acquisitions or as fair value through profit or loss or at disposals of non-controlling interest without amortized cost. At present, the company loss of control will be accounted for as equity does not identify, categorise and measure transactions and cannot be recognized as financial assets and liabilities as per the profit/loss on disposal of investments in the requirements of the standard and certain statement of financial performance. derivative instruments are not recognized on the balance sheet, and hence would require a (g) LKAS 23 – Borrowing Cost, the company change in accounting policy. must capitalize borrowing costs in relation to a qualifying asset. Since the current policy is (e) SLFRS 2 – Share Based Payments, will to expense all borrowing costs, this will result require the company to reflect in its profit in a change in accounting policy. or loss and financial position the effects of share based payment transactions, including (h) LKAS 12 – Income Tax requires deferred expenses associated with share options tax to be provided in respect of temporary granted to employees. An entity is required to differences which will arise as a result of recognize share based payment transactions adjustments made to comply with the new when goods are received or services obtained SLAS. based on the fair value of goods or services or the fair value of equity instruments granted. (i) LKAS 18 – Revenue requires the company Hence the company will be required to to measure revenue at fair value of the determine the fair value of options issued to consideration received or receivable. It also employees as remuneration and recognize specifies recognition criteria for revenue, an expense in the statement of financial and the company/group needs to apply performance. This standard is not limited to such recognition criteria to the separately options and extends to all forms of equity identifiable components of a single based remuneration and payments. transaction in order to reflect the substance of the transaction.
Ceylinco Insurance PLC 164 Annual Report 2011 (j) SLFRS 4 -Insurance Contacts has scoped in only products which fall within the definition of insurance contracts or financial instruments issued with a discretionary participation features as defined in SLFRS 4. For the purpose of identifying the contracts that can be scoped in, the company is at present performing a detailed product analysis. Any contract which is recorded at present as an insurance contract but does not meet the definitions of SLFRS 4 is required to be measured and accounted as financial instruments which will impact the recognition of Insurance revenue and the related deferred acquisition costs.
Ceylinco Insurance PLC 165 Annual Report 2011 Notes to the Financial Statements
2. Investments Consolidated Company 2011 2010 2011 2010 Rs.’000 Rs.’000 Rs.’000 Rs.’000
Government Securities Note 2 (a) 18,851,347 13,834,285 18,843,347 13,823,264 Corporate Securities Note 2 (b) 2,666,244 2,798,748 2,489,740 2,610,164 Bank Deposits 20,216,413 13,193,795 19,793,041 13,077,548 Equity Shares Note 2 (c) 656,804 357,685 641,823 357,685 Other Short Term Investments 302,300 - 292,874 - 42,693,108 30,184,513 42,060,825 29,868,661
2(a) Government Securities Treasury Bonds 18,502,480 13,545,903 18,502,480 13,545,903 Treasury Bills 237,045 245,947 237,045 245,947 Reverse Repurchase Agreements 111,822 42,435 103,822 31,414 18,851,347 13,834,285 18,843,347 13,823,264 2(b) Corporate Securities Quoted Debentures Note 2 (b) (1) 1,486,740 1,934,044 1,486,740 1,934,044 Unquoted Debentures Note 2 (b) (2) 1,003,000 501,265 1,003,000 501,265 Commercial Papers Note 2 (b) (3) - 124,855 - 124,855 Promissory Notes 176,504 238,584 - 50,000 2,666,244 2,798,748 2,489,740 2,610,164
Note 2 (b) (1) Quoted Debentures Consolidated Company Redeemable on 2011 2010 2011 2010 Cost Market Cost Market Value Value Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Hatton National Bank PLC 14.5% 10.09.2012 966 966 966 966 966 966 Commercial Bank PLC 10% 18.12.2011 - - 500,000 - - 500,000 Seylan Merchant Bank PLC 17.00% 08.11.2016 10,000 10,000 10,000 10,000 10,000 10,000 The Finance Company PLC Unsecured 14% 09.01.2012 200,000 200,000 200,000 200,000 200,000 200,000 Hatton National Bank PLC Unsecured 16% 31.12.2017 500,000 500,000 500,000 500,000 500,000 500,000 Bank of Ceylon Unsecured 11.5% 28.06.2015 500,000 500,000 500,000 500,000 500,000 500,000 Urban Development Authority Secured 11% 05.10.2015 43,570 43,570 43,570 43,570 43,570 43,570 Seylan Bank PLC. Unsecured 13% 12.07.2011 - - 625 - - 625 Seylan Bank PLC. Unsecured 15.75% 29.05.2012 1,279 1,279 810 1,279 1,279 810 Seylan Bank PLC. Unsecured 16.75% 29.05.2012 1,775 1,775 976 1,775 1,775 976 Seylan Bank PLC. Unsecured 18% 09.12.2012 50,000 50,000 50,587 50,000 50,000 50,587 Seylan Bank PLC 13.50% 12.01.2013 - - 25,000 - - 25,000 Seylan Bank PLC Unsecured 21. 50% 23.12.2013 24,000 24,000 30,000 24,000 24,000 30,000 Seylan Bank PLC 16.75% 29.05.2012 50 50 - 50 50 - Seylan Bank PLC 18% 09.12.2012 114 114 - 114 114 - Seylan Bank PLC 18% 29.05.2012 205 205 - 205 205 - Seylan Bank PLC.15.5% 28.06.2015 50 50 - 50 50 - Seylan Bank PLC.18% 09.12.2012 748 748 - 748 748 - Seylan Bank PLC.17% 09.12.2012 1,055 1,055 - 1,055 1,055 - DFCC Vardhana Bank Unsecured 11.5% 07.09.2016 74,074 74,074 - 74,074 74,074 - Seylan Bank PLC 21.5% 11.01.2014 1,019 1,019 - 1,019 1,019 - Seylan Bank PLC 20.5% 11.01.2014 61 61 - 61 61 - Sampath Bank PLC 15.5% 29.08.2012 264 264 - 264 264 - Seylan Bank PLC Unsecured 21.50% 23.12.2013 77,510 77,510 71,510 77,510 77,510 71,510 1,486,740 1,486,740 1,934,044 1,486,740 1,486,740 1,934,044
Ceylinco Insurance PLC 166 Annual Report 2011 Note 2 (b) (2) Unquoted Debentures Consolidated Company 2011 2010 2011 2010 Redeemable on Rs.’000 Rs.’000 Rs.’000 Rs.’000
Energen International Ltd. 3,000 3,000 3,000 3,000 Seylan Merchant Bank PLC. 17% 08.12.2016 10,000 10,000 10,000 10,000 Seylan Bank PLC. 21.00% % 18.07.2011 - 23,265 - 23,265 Seylan Bank PLC. 10% 12.01.2013 7,000 7,000 7,000 7,000 Seylan Bank PLC. 20.00% 24.10.2013 1,000 1,000 1,000 1,000 Seylan Bank PLC. 20.00% 24.10.2013 10,000 10,000 10,000 10,000 Seylan Bank PLC.Unsecured 11% 07.12.2015 200,000 200,000 200,000 200,000 Citizens Development Business Finance PLC.Unsecured 12.5% 30.06.2013 62,500 62,500 62,500 62,500 Citizens Development Business Finance PLC.Unsecured 12.5% 31.12.2013 62,500 62,500 62,500 62,500 Citizens Development Business Finance PLC.Unsecured 12.5% 30.06.2014 62,500 62,500 62,500 62,500 Citizens Development Business Finance PLC.Unsecured 12.5% 30.12.2014 62,500 62,500 62,500 62,500 Nation Trust Bank PLC Unsecured 11.5% 28.08.2016 275,000 - 275,000 - Central Finance PLC Unsecured 11.03% 03.03.2016 250,000 - 250,000 - 1,006,000 504,265 1,006,000 504,265
Provision for fall in value of investments in Energen International Ltd. (3,000) (3,000) (3,000) (3,000) 1,003,000 501,265 1,003,000 501,265
Note 2 (b) (3) Commercial Papers
Consolidated Company 2011 2010 2011 2010 Rs.’000 Rs.’000 Rs.’000 Rs.’000
Ceylinco Investcorp (Pvt) Ltd. - 124,855 - 124,855 Ceylinco Leasing Corporation Ltd. 3,700 3,700 3,700 3,700 Ceylinco Grameen Development Fund Co. (Pvt) Ltd 2,430 2,430 2,430 2,430 6,130 130,985 6,130 130,985 Provision for fall in value of Investments (note 2(b) (3) (1)) (6,130) (6,130) (6,130) (6,130) - 124,855 - 124,855
2(b)(3)(1) Provision for fall in value of Investments in Ceylinco Leasing Corporation Ltd. (3,700) (3,700) (3,700) (3,700) Ceylinco Grameen Development Fund Co. (Pvt) Ltd (2,430) (2,430) (2,430) (2,430) (6,130) (6,130) (6,130) (6,130)
Ceylinco Insurance PLC 167 Annual Report 2011 Notes to the Financial Statements
Note 2 (c) Equity Shares Consolidated Company 2011 2010 2011 2010 Rs.’000 Rs.’000 Rs.’000 Rs.’000
Long Term Investments - Quoted Note 2 (c) (1) 10,794 8,972 8,741 8,972 Long Term Investments - Unquoted Note 2 (c) (2) 314,107 313,186 314,107 313,186 Short Term Investments Note 2 (c) (3) 331,903 35,527 318,975 35,527 656,804 357,685 641,823 357,685
Note 2 (c) (1) Long Term Investments - Quoted Consolidated Company 2011 2010 2011 2010 No. of Cost Market No. of Cost No. of Cost Market No. of Cost Value Value Shares Rs.’000 Rs.’000 Shares Rs.’000 Shares Rs.’000 Rs.’000 Shares Rs.’000
Bank, Finance & Insurance Amana Takaful PLC 138,000 187 331 Commercial Bank PLC 30,018 131 2236 Seylan Bank PLC 3,190 3 218 - - 3,190 3 218 - - The Finance Company PLC - - - 4,480 70 - - - 4,480 70 Union Bank PLC 300 7 6 328 2,791 70 3 218 70
Land & Property Ceylinco Seylan Developments PLC 72 1 1 138,100 741 - - - 138,100 741 Colombo Fort Investment PLC 3,535 38 937 Commercial Development Company PLC 2,950 55 325 Property Development PLC 4,760 98 250 192 1,513 741 - - 741
Manufacturing Blue Diamond Jewellery Worldwide PLC 2,400,300 8,738 19,442 2,400,300 8,738 2,400,300 8,738 19,442 2,400,300 8,738 Ceylon Grain Elevators PLC 10,000 249 1,055 Royal Ceramics Lanka PLC 2,288 31 324 Tokyo Cement PLC 675 - 30 ------9,018 20,851 8,738 8,738 19,442 8,738
Provision for fall in value of Investments In Blue Diamond Jewellery Worldwide PLC. - - (577) - - (577) 9,018 20,851 8,161 8,738 19,442 8,161
Investment & Trust Free Lanka Capital Holdings PLC 12,800 64 40 Softlogic Holdings PLC 41,100 1,192 740 1,256 780
10,794 25,935 8,972 8,741 19,660 8,972
Ceylinco Insurance PLC 168 Annual Report 2011 Note 2 (c) (2) Long Term Investments - Unquoted Consolidated Company 2011 2010 2011 2010 No. of Cost No. of Cost No. of Cost No. of Cost Shares Rs.’000 Shares Rs.’000 Shares Rs.’000 Shares Rs.’000 Ordinary Shares American Education Centre Ltd. - - 535,000 4,600 - - 535,000 4,600 Asian Finance Company Ltd. 25,000 250 25,000 250 25,000 250 25,000 250 Ceylinco Building Society Ltd. 1,113,000 17,500 11,024,000 17,500 1,113,000 17,500 11,024,000 17,500 Ceylinco Capital Investment (Pvt) Ltd. 225,000 2,250 225,000 2,250 225,000 2,250 225,000 2,250 Ceylinco Cellular Communications (Pvt) Ltd. 100,000 1,000 100,000 1,000 100,000 1,000 100,000 1,000 Ceylinco Hotels Ltd. 950,000 9,500 950,000 9,500 950,000 9,500 950,000 9,500 Ceylinco International Trading Co. Ltd. 54,172 542 54,172 542 54,172 542 54,172 542 Ceylinco Industries Ltd. 50,000 500 50,000 500 50,000 500 50,000 500 Ceylinco Leasing Corporation Ltd. 300,000 3,000 300,000 3,000 300,000 3,000 300,000 3,000 Ceylinco Technologies (Pvt) Ltd. 375,000 3,750 375,000 3,750 375,000 3,750 375,000 3,750 Ceylinco Stock Brokers (Pvt) Ltd. - - 23,800 500 - - 23,800 500 Sagar Matha Insurance Company Ltd 157,980 18,557 157,980 18,557 157,980 18,557 157,980 18,557 St. Nicholas Education Services Ltd. 300,000 3,000 300,000 3,000 300,000 3,000 300,000 3,000 Ceylinco Foliage Exports ( Pvt) Ltd. 1,200,000 12,000 1,200,000 12,000 1,200,000 12,000 1,200,000 12,000 Ceylinco Travels & Tours Ltd. 250,000 2,500 250,000 2,500 250,000 2,500 250,000 2,500 Net Assist International (Pvt) Ltd. - - 75,000 750 - - 75,000 750 The Finance & Guarantee Company Ltd. 300,000 3,000 300,000 3,000 300,000 3,000 300,000 3,000 Ceylinco Investments & Realty Ltd. 1,740,000 17,100 1,740,000 17,100 1,740,000 17,100 1,740,000 17,100 TFC Homes (Pvt) Ltd. 150,000 1,500 150,000 1,500 150,000 1,500 150,000 1,500 Ceyfco Property Co. Ltd. 200,000 2,000 200,000 2,000 200,000 2,000 200,000 2,000 Ceylinco Lexcon Services (Pvt) Ltd. 22,500 225 22,500 225 22,500 225 22,500 225 CEG Education (Holding) Pvt.Ltd. - - 1,062,499 10,625 - - 1,062,499 10,625 International College of Business and Technology Ltd. - - 150,000 1,500 - - 150,000 1,500 MBSL Savings Bank (Pvt) Ltd 5,079,166 47,292 5,079,166 50,792 5,079,166 47,292 5,079,166 47,292 South Asian Travels Ltd. 1,000,000 10,000 1,000,000 10,000 1,000,000 10,000 1,000,000 10,000 Ceylinco Packaging Co. Ltd. 100,000 1,000 100,000 1,000 100,000 1,000 100,000 1,000 Ceylinco Hospitals Services Ltd 3,000,000 30,000 3,000,000 30,000 3,000,000 30,000 3,000,000 30,000 Wealth Trust Corporation (Pvt) Ltd 5,625,000 5,625 - - 5,625,000 5,625 - - Asian Reinsurance Corporation 100 24,227 - - 100 24,227 - - 216,318 207,941 216,318 204,441 Provision for fall in value of Investments (Note 2 (c) (2) (i)) (163,195) (180,922) (163,195) (177,422) 53,123 27,019 53,123 27,019
2 (c) (2) (i) Provision for fall in value of Investments American Education Centre Ltd. - (1,159) - (1,159) Ceylinco Travels & Tours Ltd. (2,500) (2,500) (2,500) (2,500) Ceylinco Foliage Exports ( Pvt) Ltd. (12,000) (12,000) (12,000) (12,000) South Asian Travels Ltd. (10,000) (10,000) (10,000) (10,000) MBSL Savings Bank (Pvt) Ltd (45,578) (49,078) (45,578) (45,578) Cefco Property Co. Ltd. (2,000) (2,000) (2,000) (2,000) Ceylinco International Trading Co. Ltd. (542) (542) (542) (542) Ceylinco Capital Investments (Pvt) LTd. (2,250) (2,250) (2,250) (2,250) Ceylinco Leasing Corporation Ltd. (3,000) (3,000) (3,000) (3,000) Ceylinco Building Society Ltd. (17,500) (17,500) (17,500) (17,500) Ceylinco PLC Technologies (Pvt) Ltd. (3,750) (3,750) (3,750) (3,750) Net Assist International (Pvt) Ltd. - (750) - (750) Ceylinco Investments & Realty Ltd. (17,100) (17,100) (17,100) (17,100) TFC Homes (Pvt) Ltd. (1,500) (1,500) (1,500) (1,500) CEG Education (Holding)Pvt.Ltd. - (10,625) - (10,625) International College of Business and Technology Ltd. - (1,500) - (1,500) Ceylinco Hospitals Services Ltd (30,000) (30,000) (30,000) (30,000) Asian Finance Company Ltd. (250) (250) (250) (250) Ceylinco Stock Brokers (Pvt) Ltd. - (193) - (193) The Finance & Guarantee Company Ltd. (3,000) (3,000) (3,000) (3,000) Ceylinco Industries Ltd. (500) (500) (500) (500) Ceylinco Hotels Ltd. (9,500) (9,500) (9,500) (9,500 Ceylinco Packaging Co. Ltd. (1,000) (1,000) (1,000) (1,000) Ceylinco Cellular Communications (Pvt) Ltd. (1,000) (1,000) (1,000) (1,000) Ceylinco Lexcon Services (Pvt) Ltd. (225) (225) (225) (225) (163,195) (180,922) (163,195) (177,422)
Ceylinco Insurance PLC 169 Annual Report 2011 Notes to the Financial Statements
Preference Shares Consolidated Company 2011 2010 2011 2010 No. of Cost No. of Cost No. of Cost No. of Cost Shares Rs.’000 Shares Rs.’000 Shares Rs.’000 Shares Rs.’000
Ceylinco International Trading Co. Ltd. 10% 5,552,304 55,523 5,552,304 55,523 5,552,304 55,523 5,552,304 55,523 Ceylinco International Trading Co. Ltd. 8% 1,000,000 10,000 1,000,000 10,000 1,000,000 10,000 1,000,000 10,000 International College of Business and Technology Ltd. 10% - - 195,828 1,958 - - 195,828 1,958 International College of Business and Technology Ltd. 8% - - 2,322,500 23,225 - - 2,322,500 23,225 Castle Realty (Pvt) Ltd. 131,885,875 131,886 131,885,875 131,886 131,885,875 131,886 131,885,875 131,886 Middleway Ltd 10% 792,500 7,925 792,500 7,925 792,500 7,925 792,500 7,925 Seylan Bank PLC 1,064,950 9,098 1,064,950 9,098 1,064,950 9,098 1,064,950 9,098 214,432 239,615 214,432 239,615 2 (c) (2) (ii) Provision for fall in value of Investments (73,448) (73,448) (73,448) (73,448) 140,984 166,167 140,984 166,167
Note 2 c (2) (ii) provision for fall in value of investments Ceylinco International Trading Co. Ltd. 10% (55,523) (55,523) (55,523) (55,523) Middleway Ltd. (7,925) (7,925) (7,925) (7,925) Ceylinco International Trading Co. Ltd. 8% (10,000) (10,000) (10,000) (10,000) (73,448) (73,448) (73,448) (73,448)
B.O.I. Approved Projects Ordinary Shares Ceylinco Developers Ltd. 200,000 2,000 200,000 2,000 200,000 2,000 200,000 2,000 Ultratech Ceylinco (Pvt) Ltd 9,000,000 90,000 9,000,000 90,000 9,000,000 90,000 9,000,000 90,000 Colombo Business School Ltd. 1,000,000 10,000 1,000,000 10,000 1,000,000 10,000 1,000,000 10,000 102,000 102,000 102,000 102,000
Provision for fall in value of Investments (Note 2 (c) (2) (ii)) (12,000) (12,000) (12,000) (12,000) 90,000 90,000 90,000 90,000
Note 2 (c) (2) (ii) Provision for fall in value of Investments
Colombo Business School Ltd. (10,000) (10,000) (10,000) (10,000) Ceylinco Developers Ltd. (2,000) (2,000) (2,000) (2,000) (12,000) (12,000) (12,000) (12,000)
Preference Shares (Non Redeemable, Non Convertible) Ceylinco Homes International (Lotus Tower) 10% 3,000,000 30,000 3,000,000 30,000 3,000,000 30,000 3,000,000 30,000 30,000 30,000 30,000 30,000 Total 314,107 313,186 314,107 313,186
Ceylinco Insurance PLC 170 Annual Report 2011 Note 2 ( c) (3) Short Term Investments Consolidated Company 2011 2010 2011 2010 No. of Cost Market No. of Cost No. of Cost Market No. of Cost Value Value Shares Rs.’000 Rs.’000 Shares Rs.’000 Shares Rs.’000 Rs.’000 Shares Rs.’000 Bank, Finance & Insurance Amana Takaful PLC 275,000 814 660 110,000 389 275,000 814 660 110,000 389 Arpico Finance Company PLC - - - 3,500 389 - - - 3,500 389 Asia Capital PLC 4,700 447 301 - - 4,700 447 301 - - Commercial Bank of Ceylon PLC Voting 621,170 85,285 62,127 1,500 397 621,170 85,285 62,127 1,500 397 Commercial Bank of Ceylon PLC Non-voting 22,000 2,108 1,639 - - 22,000 2,108 1,639 - - Commercial Credit PLC 22,300 679 537 - - 22,300 679 537 - - Central Finance PLC 100 28 20 - - 100 28 20 - - Lanka Orix Leasing Company PLC - - - 25,000 289 - - - 25,000 289 Lanka Ventures PLC. - - - 10,300 445 - - - 10,300 445 Merchant Bank of Sri Lanka PLC 28,600 1,455 1,136 18,600 947 8,600 444 344 18,600 947 National Development Bank PLC 100 15 14 - - 100 15 14 - - Nation Lanka Finance PLC. 10,072 239 160 72 1 72 1 1 72 1 Nation Trust Bank PLC 6,800 502 388 9,700 879 - - - 9,700 879 Pan Asia Bank PLC 10,000 277 250 - - 10,000 277 250 - - Sampath Bank PLC 2,000 489 390 - - 2,000 489 390 - - Seylan Bank PLC. Voting 45,846 1,903 3,140 53,810 1,820 45,846 1,903 3,140 53,810 1,820 Seylan Bank PLC. Non voting 10,000 500 306 - - 10,000 500 306 - - Sinhaputra Finance PLC. - - - 1,500 134 - - - 1,500 134 SMB Leasing PLC. - - - 200,000 354 - - - 200,000 354 The Finance Company PLC. 1,875,000 75,000 76,875 20,478 388 1,875,000 75,000 76,875 20,478 388 169,741 147,943 6,433 167,990 146,604 6,433 Beverage Foods and Tobacco Cargills Ceylon PLC. - - - 5,760 521 - - - 5,760 521 Distilleries Company of Sri Lanka PLC - - - 3,000 555 - - - 3,000 555 Kotmale Holdings PLC 100 5 5 - - 100 5 5 - - Lion Brewaries PLC 2,400 487 456 - - 2,400 487 456 - - Raigam Wayamba Saltern PLC - - - 148,400 600 - - - 148,400 600 Renuka Agri Foods PLC 75,000 523 510 58,000 398 75,000 523 510 58,000 398 1,015 971 2074 1,015 971 2074
Chemical & Pharmaceiutical Mullers and Phipps (Ceylon)PLC 241,500 26,873 18,664 210,000 403 241,500 26,873 18,664 210,000 403 CIC Holdings PLC 5,100 546 393 - - 100 10 8 - - 27,419 19,057 403 26,883 18,672 403
Diversified Holdings Aitken Spence PLC 100 15 12 - - 100 15 12 - - Browns Investments PLC 20,000,000 100,000 84,000 - - 20,000,000 100,000 84,000 - - John Keels Holdinsg PLC 174,966 38,777 29,912 - - 166,566 36,798 28,482 - - Hayleys PLC 100 39 38 - - 100 39 38 - - Hemas Holdings PLC 440,400 22,246 14,693 - - 400,400 20,223 13,373 - - Vallible One PLC 115,000 3,694 2,739 - - 15,000 438 359 - - 164,771 131,394 - 157,513 126,264 -
Footwear & Textiles Odel PLC - - - 10,000 362 - - - 10,000 362 - - 362 - - 362
Health Care Asiri Surgical Hospitals PLC 100 1 1 46,500 409 100 1 1 46,500 409 Ceylon Hospitals PLC 100 10 9 - - 100 10 9 Nawaloka Hospitals PLC. 125,000 506 488 150,000 697 125,000 506 488 150,000 697 Lanka Hospitals PLC - - - 8,500 262 - - - 8,500 262 517 498 1,368 517 498 1,368
Hotels And Travels Aitken Spence Hotel Holdings PLC 100 8 7 - - 100 8 7 - - Browns Beach Hotels PLC - - - 5,000 402 - - - 5,000 402 Citrus Leisure PLC 10,000 839 501 10,000 438 - - - 10,000 438 Dolphin Hotels PLC 7,000 456 301 - - 7,000 456 301 - - Eden Hotels PLC. 10,000 495 380 5,000 313 10,000 495 380 5,000 313 Fortress Resort PLC - - - 19,000 392 - - - 19,000 392 Light House Hotel PLC. - - - 5,000 350 - - - 5,000 350 Pegases Hotel PLC. - - - 7,700 582 - - - 7,700 582 Royal Palm Beach Hotels PLC 100 8 7 - - 100 8 7 - - Keels Hotel PLC. - - - 25,000 535 - - - 25,000 535 Taj Lanka Hotels PLC 5,000 273 195 5,400 396 5,000 273 195 5,400 396 2,079 1,391 3,407 1,240 890 3,407
Ceylinco Insurance PLC 171 Annual Report 2011 Notes to the Financial Statements
Note 2 ( c) (3) Short Term Investments
Consolidated Company 2011 2010 2011 2010 No. of Cost Market No. of Cost No. of Cost Market No. of Cost Value Value Shares Rs.’000 Rs.’000 Shares Rs.’000 Shares Rs.’000 Rs.’000 Shares Rs.’000
Information Technology E - Chanelling PLC - - - 10,000 222 - - - 10,000 222 - - 222 - - 222
Investment & Trust Renuka Holdings PLC - - - 6,300 392 - - - 6,300 392 Softlogic Holdings PLC 273,500 7,622 4,923 - - - - - 7,622 4,923 392 - - 392
Land & Property CT Land Development PLC 17,000 550 491 14,200 406 17,000 550 491 14,200 406 East West PLC. - - - 25,700 147 - - - 25,700 147 Equity Two PLC. - - - 7,500 213 - - - 7,500 213 Overseas Reality (Ceylon) PLC 60,000 1,013 846 - - 60,000 1,013 846 - - Seylan Development PLC. - - - 519,730 3,975 - - - 519,730 3,975 1,563 1,337 4,741 1,563 1,337 4,741
Manufacturing ACL Cables PLC - - - 9,700 904 - - - 9,700 904 Acme Printing PLC - - - 17,502 414 - - - 17,502 414 Alufab PLC - - - 10,000 473 - - - 10,000 473 Blue Diamond Jewellery Worldwide PLC. 2,685,480 7,757 21,752 3,036,680 8,770 2,685,480 7,757 21,752 3,036,680 8,770 Bogala Graphite Lanka PLC - - - 6,800 405 - - - 6,800 405 Dipped Product PLC 100 10 10 - - 100 10 10 - - Ceylon Grain Elevators PLC - - - 2,000 131 - - - 2,000 131 Hayleys Export PLC - - - 1,000 40 - - - 1,000 40 Kelani Tyres PLC 17,000 945 646 - - 17,000 945 646 - - Piramal Glass Ceylon PLC - - - 50,000 399 - - - 50,000 399 Richard Pieris & Company PLC. 31,000 421 279 405 1 31,000 421 279 405 1 Royal Ceramic PLC 3,300 491 462 - - 3,300 491 462 - - Textured Jercey PLC 20,000 307 204 - - 20,000 307 204 - - Tokyo Cement Company (Lanka) PLC -Voting 100 4 4 6,800 379 100 4 4 6,800 379 Tokyo Cement Company (Lanka) PLC -Non Voting 10,100 460 308 - - 100 5 3 - - 10,395 23,665 11,917 9,940 23,360 11917
Plantations Elpitiya Plantation PLC(XD) 14,800 549 355 10,000 250 14,800 549 355 10,000 250 Bogawantalawa Tea Estates PLC - - - 7,500 237 - - - 7,500 237 Kotagala Plantation PLC 100 14 6 - - 100 14 6 Watawala Plantation PLC - - - 19,800 750 - - - 19,800 750 563 361 1,237 563 361 1,237
Power & Energy Chevron Lubricant Lanka PLC 100 16 17 - - 100 16 17 Hemas Power PLC - - - 14,400 435 - - - 14,400 435 Hydro Power Free Lanka PLC - - - 25,000 402 - - - 25,000 402 Laugfs Gas PLC 15,000 506 345 Vallibel Power Erathna PLC - - - 45,000 414 - - - 45,000 414 Vidullanka PLC - - - 95,300 852 - - - 95,300 852 522 362 2,102 16 17 2,102
Telecommunication Dialog Axiata PLC 100 1 1 - - 100 1 1 1 1 - 1 1 Trading Ceylon Foreign Trades PLC - - - 75,700 605 - - - 75,700 605 Tess Agro PLC - - - 96,600 265 - - - 96,600 265 - - 870 - - 870
Total before Provision 386,208 331,903 35,527 367,241 318,975 35,527 Provision for Fall in value - (54,305) - - - (48,266) Total after Provision 331,903 331,903 35,527 318,975 318,975 35,527
Ceylinco Insurance PLC 172 Annual Report 2011 3. Investment Property Consolidated Company 2011 2010 2011 2010 Rs.’000 Rs.’000 Rs.’000 Rs.’000
At the beginning of the year 2,590,381 2,526,855 2,590,381 2,526,855 Changes in Fair value 305,664 - 305,664 - Additions during the year 481,480 136,579 481,480 136,579 Disposal During the year (12,074) (73,053) (12,074) (73,053) Transfers (153,361) - (153,361) - At the end of the year (3a) 3,212,090 2,590,381 3,212,090 2,590,381
3 (a) Details of Investment Property of Company
Building Extent Value Value of Total Sq. Ft. Perches of Land Building Rs.’000 Rs.’000 Rs.’000
Non - Life Insurance No.2, R.A.De Mel Mawatha,Colombo-04 12432 A-0-R-0-P-11 104,289 49,044 153,333 598, Galle Road, Colombo-3 6022 A-0-R-0-P-11 43,500 16,500 60,000 No,34, Muhandiram ED Dabare Mawatha, Colombo-05 (4 Apartments) 6306 118,100 118,100 Wewa Road,Wickramasinghepura ,Battaramulla (2 Houses) 5525 A-0-R-0-P-20 14,560 30,440 45,000 Matagoda Road, Hendala, Wattala (4 Houses) 10107 A-0-R-0-P-35.2 11,653 35,747 47,400 Erewwala, Pannipitiya (4 Houses) 7648 A-0-R-0-P-33.9 15,808 30,742 46,550 Siyanepura, Horogolla, Nittambu A-0-R-0-P-62.7 15,000 15,000 No.260/21, Kendaliyadaapaluwa, Ganemulla (1 House) 890 A-0-R-0-P-12 2,100 3,400 5,500 Lavulugahawatta, Polwatta, Gunasekara Mawatha, Himbutana, Mullariya (1 House) 1925 A-0-R-0-P-10 2,500 3,000 5,500 Ideal Park, Nainamadama West, Wennappuwa A-0-R-0-P-12.5 2,250 2,250 Wewa Road,Wickramasinghepura,Battaramulla (8 Houses) 23824 A-0-R-0-P-82.3 56,936 120,564 177,500 No.110, Maya Avnue, Wellawatta North, Colombo-06 A-0-R-0-P-28.5 121,000 121,000 Averihena, Thalangama (9 Houses) 23824 A-0-R-0-P-131.1 74,183 133,367 207,550 Ilimbemukalana Estate, Horana A-0-R-0-P-12.90 3,800 3,800 Erewwala, Pannipitiya A-0-R-0-P-33.2 13,000 13,000 Siyanepura, Horogolla, Nittambuwa (1 House) 2087 A-0-R-0-P-11.5 3,375 9,125 12,500 Matagoda Road, Hendala, Wattala (1 House) 2908 A-0-R-0-P-8.65 3,027 8,773 11,800 Digorella, Moratuwa A-0-R-0-P-30 13,500 13,500 Dehiwela 138/1 & 138 Galle Road, Mount Lavinia A-0-R-0-P-27.55 66,000 66,000 135/11 Vanaguru Mawatha, Hokandara 1460 A-0-R-0-P-7.73 2,706 5,294 8,000 135/10, Vanaguru Mawatha, Hokandara 1978 A-0-R-0-P-9.67 3,384 6,616 10,000 Sub Total 572,571 570,712 1,143,283
Ceylinco Insurance PLC 173 Annual Report 2011 Notes to the Financial Statements
3 (a) Details of Investment Property of Company (Contd.)
Building Extent Value Value of Total Sq. Ft. Perches of Land Building Rs.’000 Rs.’000 Rs.’000
Life Insurance Nuwara Eliya, Block No.31 & 07 Mistry Hills A-0-R-0-P-13.5 4,387 - 4,387 No. 97D, Palawatha Daganana Road, Minuwangoda A-2-R-2-P-23 16,000 - 16,000 No. 70, Park Street, Colombo 02 A-0-R-1-P-32.40 543,000 - 543,000 No. 36, Talbot Town, Lane1, Galle 6573 A-0-R-0-P-20 70,000 17,250 87,250 No.27, Fifth Cross Street, Nambimulla, Ambalangoda 5620 A-0-R-0-P-20 30,000 21,300 51,300 No. 115, Green Road, Negombo A-0-R-0-P-37.5 78,750 - 78,750 No.63, King Street, Kandy 14,670 A-0-R-1-P-1.25 206,250 40,750 247,000 Anagarika Dharmapala Mawatha, Matara 7,211 A-0-R-0-P-26.44 66,100 21,900 88,000 No. 401, Main Street, Panadura 4,150 A-0-R-1-P-4.12 104,771 5,229 110,000 No. 428, R. A. De Mel Mv, Colombo 03 8300 Condominium - 100,000 100,000 No.38, Rajapihilla Mawatha, Kurunegala A-0-R-0-P-23.93 24,000 - 24,000 No. 60, Park Street, Colombo 02 34854 A-0-R-1-P-2.82 299,740 160,260 460,000 7th Floor of Ceylinco House, Colombo 01 4,907 - 79,325 79,325 6th Floor of Ceylinco House, Colombo 01 11,320 - 179,795 179,795 Sub Total 1,442,998 625,809 2,068,807 Total 2,015,569 1,196,521 3,212,090
3. (a) At the Balance Sheet date investment property was valued by qualified valuers Mr.W.A.D.Sarath Kumara, Mr.M.P.Panagoda and Mr.K.D.T.Tissera. The fair value of investment property reflects the actual market value situation and circumstances as of the Balance Sheet date.
3. (b) Golden Key Building situated at No 2, Lauries Place, Colombo 04, which is jointly owned by the Company & Golden Key Credit Card Company Limited, Mortgaged to Seylan Bank PLC by Golden Key Credit Card Company Limited to obtain loan facility. (value of the property amounting to Rs.153Mn).
Ceylinco Insurance PLC 174 Annual Report 2011 4. Investments in Subsidiaries ( Unquoted) Company % holding Number of Shares Cost 2011 2010 2011 2010 2011 2010 RS.000 RS.000 Serene Resorts Ltd. 100% 100% 2,000,000 2,000,000 20,000 20,000 Ceylinco Seraka Ltd. 5% 5% 5,000 5,000 50 50 Ceylinco Healthcare Services Ltd. 99% 99% 52,100,000 52,100,000 521,000 521,000 Ceypower Cascades (Pvt) Ltd. 80% 55% 13,870,313 4,125,000 148,500 55,000 Ceylinco Investcorp (Pvt) Ltd. 75% 75% 112,500 112,500 1,125 1,125 Ceylinco Insurance Company (Pvt) Ltd (Maldives) 60% 60% 9,339 9,339 42,723 42,723 Cey Hydro Developers Ltd. 95% 80% 49,091,034 10,800,000 517,914 135,000 Energy Generators (Pvt) Ltd. 35% 100% 60,907,250 924,999 60,907 50,907 International College of Business & Technology Ltd. 6% 6% 150,000 - 1,500 - CEG Education Holdings (Pvt) Ltd 63% - 2,912,499 - 66,532 - American Education Centre Ltd. 13% - 535,000 - 4,600 - Preference shares Ceypower Cascades (Pvt) Ltd. - 15% - 9,745,313 - 93,500 Cey Hydro Developers Ltd. - 38,291,034 - 382,914 International College of Business and Technology Ltd.-10% 195,828 - 1,958 - International College of Business and Technology Ltd.-8% 2,322,500 - 23,225 - 1,410,034 1,302,219 Provision for fall in value of Investments Serene Resorts Ltd. (20,000) (20,000) Ceylinco Seraka Ltd. (50) (50) CEG Education Holdings (Pvt) Ltd (2,525) - 1,387,459 1,282,169
Impact in Impact in Group Income Group Balance Company Name Group % Relationship Statement Sheet Holding Rs.’000 Rs.’000 Group entities where audited accounts are consolidated Serene Resorts Ltd 100.00% Subsidiary 42 (20,238) Ceylinco Seraka Ltd 100.00% Subsidiary (270) 245 Ceylinco Healthcare Services Ltd 99.15% Subsidiary 17,428 412,152 Ceypower Cascades (Pvt) Ltd 80.00% Subsidiary 27,517 496,437 CeyHydro Developers (Pvt) Ltd 95.00% Subsidiary 41,235 878,952 Ceylinco Investcorp (Pvt) Ltd 75.00% Subsidiary 1,782 9,384 Energy Generators (Pvt.)Ltd. 46.00% Subsidiary (5,108) 270,178 Ceylinco Insurance Company (Pvt) Ltd(Maldives) 60.00% Subsidiary 160 90,785 CEG Education Holdings (Pvt) Ltd 63.00% Subsidiary 7,415 224,466 90,201 2,362,361 4.1 Group entities where equity accounted 2011
Ceylinco Homes International Ltd (Unaudited) 32.50% Associate 872 63,353 Citizens Development Business Finance PLC (Audited) 35.60% Associate 191,105 285,499 191,977 348,852
Ceylinco Insurance PLC 175 Annual Report 2011 Notes to the Financial Statements
4.2 Unconsolidated group entities and its imapcts to the group financial statements
Impact in Group Financial Statements Group % Holding 2011 2010
4.2.(a) The entities that become subsidiaries; (a.i) As per requirements of Sri Lanka Accounting Standard 26- Consolidated and Separate Financial Statements. Premium Securities (Pvt) Ltd and its subsidiaries & associates - Not Quantified Not Quantified has not been consolidated upto 7th December, 2011(Note A)
Ceylinco Financial Consultancy Services (Pvt) Ltd. 60% Not Quantified Not Quantified The company has accounted for this investment at cost and it has not been consolidated upto 28th October, 2011, On 28th October, 2011 Ceylinco Insurance has disposed the investment in this Company.
CAS Recoveries & Custodial Service (Pvt) Ltd 86% Not Quantified Not Quantified The Company has accounted for this investment at cost and it has not been consolidated.The Company has held an Extraordinary General Meeting on 17th October, 2011 and has resolved to appoint a liquidator subject to clearance from Court.
Castle Realty Pvt Ltd. - Not Quantified Not Quantified (Formally known as Ceylinco Life Holdings (Pvt) Ltd).As described in Note B based on the significant judgement made by the management, the control ceased to exist on 7th January 2011 for Castle Realty (Pvt) Ltd.
(a.ii) As per requirements of Companies Act No. 7of 2007 CAS Recoveries & Custodial Service (Pvt) Ltd 86% Not Quantified Not Quantified The Company has accounted for this investment at cost and it has not been consolidated.The Company has held an Extraordinary General Meeting on 17th October, 2011 and has resolved to appoint a liquidator subject to clearance from Court.
Ceylinco Financial Consultancy Services (Pvt) Ltd. 60% Not Quantified Not Quantified The company has accounted for this investment at cost and it has not been consolidated upto 28th October, 2011, which date the investment was sold.
4.2.(b) The entity become associate as per requirements of Sri Lanka Accounting Standard 27 -Investment in Associates. Ceylinco Tourist Hotels Ltd-The Company has accounted 25.15% Not Quantified Not Quantified for this investment at cost and it has not accounted under the equity method of accounting upto 18th February, 2011 which date the investment was sold.
Ceylinco Insurance PLC 176 Annual Report 2011 Note A: On 7th December 2011, Ceylinco Insurance Plc has obtained 40% ordinary shares investment of the CEG Education Holdings (Pvt) Ltd. that was originally held by Premium Securities (Pvt)Ltd. in settlement of funds provided to Premium Securities (Pvt)Ltd. The Management of Ceylinco Insurance PLC considered the 40% ordinary shares investment of the CEG Education Holdings (Pvt) Ltd. to have fair value of Rs.55.9 Mn.On 7th December 2011, the Ceylinco Insurance Plc has consolidated CEG Education Group on a prospective basis by incorporating the assets and liabilities of such group to the consolidated financial statements. The value of adjustments arising from such consolidation amounting to Rs. 53 Mn has been reflected in the consolidated equity statement as adjustment due to structural reorganisation.
Note B: The Directors are of the view that Ceylinco Insurance Plc is not substantially exposed to the inherent risks of the assets of the Castle Reality (Pvt) Ltd. as the market value of such assets held by Castle Reality (Pvt) Ltd are significantly higher than the funding provided to Castle Reality (Pvt) Ltd. The Management would evaluate the above position of the assets and liabilities on a regular basis.
4.3 Group entities where unaudited accounts are consolidated -2010
Impact in Group Impact in Income Group Balance Statement Sheet Rs.’000 Rs.’000
Ceylinco Homes International Ltd 32.50% Associate 568 62,482 L & T Infocity Lanka(Pvt)Ltd 20.00% Associate 4,019 - Citizens Development Business Finance PLC 35.60% Associate 104,062 132,216 108,649 194,698
5. Company / Group Investments in Associates
Interest % Number of shares Value Company 2011 2010 2011 2010 2011 2010 Rs.000 Rs.000
Quoted Investments Citizens Development Business Finance PLC 35.60% 35.60% 16,718,005 14,134,781 315,093 139,890 Unquoted Investments Ceylinco Homes International Ltd. 32.50% 32.50% 1,305,000 1,305,000 13,050 13,050 L & T Inforcity Lanka Ltd. - 20.00% - 3,500,075 - 35,000 Ceylinco Tourist Hotels Ltd. - 25.5% - 260,296 39,285 39,285 Disposal of Associates Disposal of L & T Inforcity Lanka Ltd. - (35,000) Disposal of Ceylinco Tourist Hotels Ltd (39,285) - Company / Group Investments in Associates ( At Cost) 328,143 192,225
Ceylinco Insurance PLC 177 Annual Report 2011 Notes to the Financial Statements
5. Company / Group Investments in Associates (Contd.)
Value Company 2011 2010 Rs.000 Rs.000
Provision for fall in value of Shares Unquoted Investments Ceylinco Tourist Hotels Ltd. - (26,750) Group 328,143 165,475 Negative Goodwill on Acquisition Ceylinco Homes International Ltd. 13,218 13,218 Citizens Development Business Finance PLC 14,485 14,485 Group share of Associates Companies Retained Assets Ceylinco Homes International Ltd. 22,839 49,263 Citizens Development Business Finance PLC 403,772 117,731 L & T Inforcity Lanka (Pvt) Ltd. - 37,704 Disposal of L & T Inforcity Lanka (Pvt) Ltd. - (37,704) Group Investments in Associates ( Equity Basis) 782,457 360,172
Summarised financial information of associates Group Share of;
Revenue 968,712 714,210 Profit or Loss 191,977 70,945 Total Assets 5,343,594 3,234,778 Total Liabilities 4,560,833 2,899,056
6 Intangible Assets Consolidated Company Software 2011 2010 2011 2010 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Cost Balance as at 1st January 270,757 265,347 270,757 265,347 Additions 6,468 5,410 6,468 5,410 Balance as at 31st December 277,225 270,757 277,225 270,757
Amortization Balance as at 1st January 188,061 130,270 188,061 130,270 Amortization for the year 52,356 57,791 52,356 57,791 Balance as at 31st December 240,417 188,061 240,417 188,061
Carrying Amount as at 31st December 36,808 82,696 36,808 82,696
Goodwill (6.1) 193,163 - - - License Cost 1,181 - - - Total 231,152 82,696 36,808 82,696
Software consist of operating software system and PDA phones software.
6.1 The amount represents the Goodwill reflected in the CEG Education Holdings (Pvt) Ltd.’s books.
Ceylinco Insurance PLC 178 Annual Report 2011 7 Property , Plant and Equipment Consolidated As at Additions Revaluation Disposals As at 01.01.2011 31.12.2011 Cost / Valuation Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000
Freehold Land 1,584,276 267,267 749,021 443,833 2,156,731 Buildings 2,509,544 491,943 100,911 679,778 2,422,620 Plant & Machinery 1,807,642 45,323 - 857 1,852,108 Motor Vehicles 1,278,420 279,715 - 945,369 612,766 Office Equipment 459,426 168,029 - 34,361 593,094 Computer Equipment 721,237 109,023 - 46,211 784,049 Furniture & Fittings 480,262 114,138 - 18,342 576,058 8,840,807 1,475,438 849,932 2,168,751 8,997,426
As at Charge Adjustment on Disposals As at 01.01.2011 for the year Revaluation 31.12.2011 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Depreciation Buildings 146,239 114,178 149,116 46,476 64,825 Plant & Machinery 150,809 86,699 - 671 236,837 Motor Vehicles 520,835 162,455 - 423,722 259,568 Office Equipment 183,641 139,225 - 25,074 297,792 Computer Equipment 599,940 87,095 - 45,508 641,527 Furniture & Fittings 223,141 94,891 - 13,406 304,626 1,824,605 684,543 149,116 554,857 1,805,175 Carrying Amount Freehold Land 1,584,276 2,156,731 Buildings 2,363,305 2,357,795 Plant & Machinery 1,656,833 1,615,271 Motor Vehicles 757,585 353,198 Office Equipment 275,785 295,302 Computer Equipment 121,297 142,522 Furniture & Fittings 257,121 271,432 Capital Work In Progress 3,791 226,154 7,019,993 7,418,405
Depreciation charge for the year includes cumulative depreciation amounting to Rs. 288,417,000 of CEG Education Holdings (Pvt) ltd.
Company As at Additions Revlauation Disposals As at 01.01.2011 31.12.2011 Cost/Valuation Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000
Freehold Land (Note 7(a) ) 1,517,293 179,399 749,021 444,252 2,001,461 Buildings (Note 7(a) ) 2,498,127 257,757 100,911 679,778 2,177,017 Plant & Machinery 31,959 2,188 - 857 33,290 Motor Vehicles 1,255,566 169,881 - 944,213 481,234 Office Equipment 444,051 39,028 - 34,361 448,718 Computer Equipment 698,088 50,154 - 46,211 702,031 Furniture & Fittings 414,228 38,290 - 18,342 434,176 6,859,312 736,697 849,932 2,168,014 6,277,927
Ceylinco Insurance PLC 179 Annual Report 2011 Notes to the Financial Statements
7 Property , Plant and Equipment (Contd) As at Charge Adjustment on Disposals As at 01.01.2011 for the year Revaluation 31.12.2011 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Depreciation Buildings 146,239 49,672 149,116 46,476 319 Plant & Machinery 16,551 3,164 - 671 19,044 Motor Vehicles 514,255 118,408 - 422,566 210,097 Office Equipment 174,618 43,493 - 25,074 193,037 Computer Equipment 581,498 45,492 - 45,508 581,482 Furniture & Fittings 199,602 38,070 - 13,406 224,266 1,632,763 298,299 149,116 553,701 1,228,245 Carrying Amount Freehold Land (Note 7(a)) 1,517,293 2,001,461 Buildings (Note 7(a)) 2,351,888 2,176,698 Plant & Machinery 15,408 14,246 Motor Vehicles 741,311 271,137 Office Equipment 269,433 255,681 Computer Equipment 116,590 120,549 Furniture & Fittings 214,626 209,910 Capital Work In Progress 3,791 15,978 5,230,340 5,065,660 Capital work-in-progress represents the amount of expenditure recognised under property plant & equipment during the period of the construction of a capital asset.
7 (a) Details of Freehold Land & Building of Company Addresses Building Extent Cost Value Sq. Ft. Valuation of Land Non - Life Insurance Rs.’000 Rs.’000 282, High Level Road, Kottawa 2,625 Condominium 7,500 3,468 97, Bauddhaloka Mawatha, Gampaha 10,436 A-0-R-0-P 16.50 60,000 33,000 (Value of Land as at 31st, December 2011 Rs.33,000,000) 42/1, Mihidu Mawatha, Kurunegala 7,600 A-0-R-0-P 8.2 60,000 16,400 (Value of land as at 31 st, December 2011 Rs.16,400,000) 583/ 63 Liyanagemulla , Seeduwa 34,465 A-6-R-0-P 11.70 210,000 175,650 (Value of Land as at 31st, December 2011 Rs.175,650,000) 60 ,Yovunpitiya Watte, Gnanawimala Mawatha. 7,776 A-0-R-1-P 29 41,000 6,900 Kosgoda , Balapitiya (Value of Land as at 31st, December2011 Rs.6,900,000 ) 63, Janadhipathi Mawatha, Colombo 1. - A-0-R-0-P 13.84 110,500 110,500 (Value of Land as at 31st , December 2011 Rs.110,500,.000 ) 3 rd ,4 th, 7th & 11 th Floors of Ceylinco House Building 43,468 540,000 - 69, “Ceylinco House” Janadhipathi Mawatha, Colombo 1. 167 /30 ,Avissawella Road , Wellampitiya 21,722 A-0-R-1-P 03.74 23,370 - (Value of Land as at 31st, December 2011 Rs.16,402,000 ) “46 / 34 “VIP Centre” Nawam Mawatha , Colombo 2. 19,534 A-0-R-0-P 19.00 225,000 152,000 ( Value of land as at 31st, December 2011 Rs.152,000,000) Panagoda 2,500 A-0-R-0-P 20.3 2,900 - 72,Pamunuwa, Maharagama - A-0-R-0-P 31 500 500 Madabawita, Warakapola 650 A-0-R-0-P 20.00 5,250 3,000 ( Value of land as at 31st, December 2011 Rs.3,000,000)
Ceylinco Insurance PLC 180 Annual Report 2011 7 (a) Details of Freehold Land & Building of Company Addresses Building Extent Cost Value Sq. Ft. Valuation of Land Non - Life Insurance Rs.’000 Rs.’000 Malangama, Kuruwita 650 A-0-R-0-P 15.00 5,600 3,750 ( Value of land as at 31st, December 2011 Rs.3,750,000) Induruwa, Kosgoda 650 A-0-R-0-P 24.30 7,000 4,860 ( Value of land as at 31st, December2011 Rs.4,860,000) Ibbagamuwa, Melsiripura 650 A-0-R-1-P 00.00 7,750 5,600
( Value of land as at 31st, December 2011 Rs.5,600,000) Unakuruwa , Tangalle 650 A-0-R-1-P 38.88 5,000 2,500 ( Value of land as at 31st, December2011 Rs.2,500,000) Bebilioya, Kithulgala 5,577 A-0-R-2-P 7.00 19,300 6,005 ( Value of land as at 31st, December2011 Rs.6,005,250) Ibbanwewa, Pussellawa 650 A-0-R-0-P 11.60 5,000 2,610 ( Value of land as at 31st, December2011 Rs.2,610,000) Attidiya Kawdana ( Lot No. 13 & 23) - A-0-R-0-P 24.00 21,000 21,000 ( Value of land as at 31st, December2011 Rs.21,000,000) Total 1,356,670 547,743
Land and Buildings of the Non-Life Division as at 31st December 2011, other than at Panagoda No.72 Pamunuwa , Maharagama were assessed by Mr.K.T.D.Tissera Chartered Valuation Surveyor. Land and Buildings of Life Division as at 31st December 2011 were revalued by the qualified independent valuers Mr.W.A.D.Sarath Kumara and Mr.M.P.Panagoda (Incorporated valuers). The revaluation surplus was transferred to Revaluation Reserve.
Addresses Building Extent Cost Value Sq. Ft. Valuation of Land Life Insurance Rs.’000 Rs.’000
115, Greens Road, Negombo 8,188 A-0-R-0-P-15.00 56,043 22,500 (Valuation of land Rs.22,500,000/-) Life Centre’ New Wing 134, Galle Road, Colombo 03 18,423 A-0-R-0-P-20.10 227,000 175,890 (Valuation of land Rs.175,890,000/-) 63, Janadhipathi Mawatha, Colombo 01 0 A-0-R-0-P-13.84 117,640 117,640 60,Colombo Road,Kaluwella, Galle 11,785 A-0-R-0-P-16.10 85,000 32,200 (Valuation of Land Rs. 32,200,000/-) 5th Floor, No.69, “Ceylinco House” Janadhipathi Mawatha, Colombo-01 11,320 176,585 - 54,Harichchandra Mawatha, Anuradhapura 17,500 A-0-R-1-P-10.00 119,864 35,476 (Valuation of Land Rs.35,476,000/-) Serene Resorts, Bopitiya Road, Uswetakeiyyawa 55,000 A-02-R-03-P-30 226,000 94,000 (Valuation of Land Rs.94,000,000/-) Middleway Ltd. Building 167/30, Avissawella Road, Wellampitiya. 21,722 A-00-R-01-P-3.74 37,852 - No. 06, Station Road, Matara 3,000 A-0-R-0-P-9.275 45,520 38,820 (Valuation of Land Rs. 38,820,000/-) Main Street, Tissamaharama 8,468 A-0-R-1-P-0 43,055 12,000 (Valuation of Land Rs. 12,000,000/-) Dharmapala Mawatha , Rathnapura 2,400 A-0-R-0-P-35.5 59,621 53,250 (Valuation of Land Rs. 53,250,000/-) No. 264, Galle Road , Panadura A-0-R-0-P-23 29,000 29,000
Ceylinco Insurance PLC 181 Annual Report 2011 Notes to the Financial Statements
7 (a) Details of Freehold Land & Building of Company (Contd.)
Addresses Building Extent Cost Value Sq. Ft. Valuation of Land Life Insurance Rs.’000 Rs.’000 (Valuation of Land Rs. 29,000,000/-) No. 423, Main Street , Kalutara 12,615 A-0-R-0-P-32.75 107,800 26,200 (Valuation of Land Rs 26,200,000/-) No, 327, Badulla RD , Bandarawela A-0-R-0-P-17.01 11,000 11,000 (Valuation of land Rs.11,000,000/-) No. 106, Havelock Road, Colombo 05 62,807 A-0-R-0-P-35.2 857,300 282,160 (Valuation of land Rs. 282,160,000/-) No. 211, New Galle Road , Moratuwa A-0-R-0-P-20.24 27,325 27,325 (Valuation of land Rs. 32,380,000/-) Block No. 32, Mistry Hills, Nuwara Eliya 5,400 A-0-R-0-P-26.9 31,323 9,082 (Valuation of land Rs. 9,082,500/-) No.15 , Rexdias Mawatha, Wennappuwa A-0-R-0-P-37.4 23,375 23,375 (Valuation of land Rs. 23,375,000/-) No 91, Baddhaloka Mv, Gampaha A-0-R-0-P-32.5 65,000 65,000 (Valuation of land Rs. 65,000,000/-) 40, Rajapihilla Mawatha, Kurunegala 11,020 A-0-R-0-P-15.5 81,755 15,500 (Valuation of land Rs. 15,500,000/-) Kurunegala Road, Chilaw A-0-R-0-P-30.0 13,500 13,500 (Valuation of land Rs. 13,500,000/-) No 38, Abdul Gafoor Mawatha, Colombo 03 A-0-R-0-P-44.5 245,000 245,000 (Valuation of land Rs. 245,000,000/-) No 406, Galle Road Rawatawatta, Moratuwa 4,500 A-0-R-0-P.39.73 70,000 59,550 (Valuation of land Rs. 59,550,000/-). No. 37,39 & 41, Vannarponnai, South East in the Parish of Vannarponnai, Jaffna A-0.1233-R-0-P-0 38,250 38,250 (Valuation of Land Rs38,250,000/-) No.22, Lloyd’s Avenue, Batticaloa. (Cost of land Rs. 27,000,000/-). A-0-R-0-P-23.83 27,000 27,000 Total 2,821,808 1,453,718
Company Total 4,178,478 2,001,461
7(b) During the year 2007 , the Company purchased the 7 th floor of “Ceylinco House”, No.69, Janadhipathi Mawatha, Colombo 01, together with the common elements of the property for a consideration as given below from the Vendors, Ceylinco Limited.
General Division Advance of Rs. 25 Mn and the balance sum of Rs.91.3 Mn is payable over a period of seven years, commencing January 2007.
Life Division Advance of Rs. 25 Mn.and the balance sum of Rs.91.3 Mn. is payable over a period of seven years commencing January 2007.
The above property were capitalised under Land and Buildings at the sum of the advance payment and cash price equivalent of the future annual installment payments.The finance cost portion of the future instalments payables are included under interest in suspence and will be amortised over the period of such payments.The cost of capital of 15.9% was considered in determining the cash price equivalent.
Ceylinco Insurance PLC 182 Annual Report 2011 7(c) Revaluation
Company The Company’s Land and Buildings were revalued on 31st December 2011 by qualified valuers. Valuation were made on the basis of open market value. The revaluation surplus was transferred to the Revaluation Reserve.
Group Cey Hydro Developers (Pvt) Ltd Freehold land, Power House Building, Civil Constructions & Project Equipment were revalued by K.T. Tissera, a qualified independent valuer on 31 December 2010. The resultant surplus of Rs. 274.6 million was transferred to the revaluation reserve.
Ceypower Cascades (Pvt) Ltd Land, Project civil cost and Plant and Machinary were revalued by K.T. Tissera, a qualified independent valuer on 31 December 2010. The resultant surplus of Rs. 224.7 million was transferred to the revaluation reserve.
If land and buildings,Plant & Machinery were stated at, the historical cost, the amounts stated would have been as follows; Cumulative Depreciation Net Carrying Net Carrying If assets were Amount Amount Class of Asset Cost carried at cost 2011 2010 Rs.000 Rs.000 Rs.000 Rs.000
Non Life Division Land & Buildings 964,773 (100,808) 863,965 988,133 Life Division Land & Buildings 2,960,236 (113,273) 2,846,963 2,588,016 Cey Hydro Developers (Pvt) Ltd Freehold land, Power House Building, Civil Constructions & Project Equipment 737,081 (70,036) 667,045 679,620 Ceypower Cascades (Pvt) Ltd Land, Project civil cost and Plant and Machinary 297,629 (44,385) 253,244 250,210 4,959,719 (328,502) 4,631,217 4,515,979
8 Leasehold Rights Consolidated Company 2011 2010 2011 2010 RS.’000 RS.’000 RS.’000 RS.’000
Acquisition Cost Balance as at 1st January 9,250 9,250 - - Additions 22,411 - 22,411 - Balance as at 31st December 31,661 9,250 22,411 -
Amortization Balance as at 1st January 3,888 3,262 - - Depreciation charged for the year 1,045 626 419 - Balance as at 31st December 4,933 3,888 419 -
Carrying Amount as at 31st December 26,728 5,362 21,992 -
During the year 2004,Ceypower Cascades(Pvt) Ltd,a subsidiary purchased a land situated at Belihuloya on lease for a period of 15 years to construct the power house. Full payment has been made in the year 2004 and the value is amortised over the period of fifteen years.
Ceylinco Insurance PLC 183 Annual Report 2011 Notes to the Financial Statements
Consolidated Company 2011 2010 2011 2010 Rs.’000 Rs. ‘000 Rs.’000 Rs.’000 9 Reinsurance Receivable Reinsurance Receivable -Non Life 1,881,447 2,341,540 1,831,062 2,322,006 Reinsurance Debtors - Life 23,857 72,022 23,857 72,022 1,905,304 2,413,562 1,854,919 2,394,028
10 Other Assets Advances, Deposits & Prepayments 275,290 248,311 148,073 214,298 Inventories 56,556 57,626 51,702 55,133 Interest Income Receivable 1,984,379 1,728,753 1,979,178 1,725,544 Amounts due from Related Companies (Note 10(a)) 141,220 244,375 218,745 377,855 Staff Loans (Note 10 (b)) 420,013 432,983 420,013 432,983 Income Tax Recoverable (Note 10(d) 679,927 518,458 679,465 518,458 Vehicle Loans (Note 10(e)) 218,824 258,705 218,824 258,705 Other Receivables 196,225 238,702 109,733 114,067 3,972,435 3,727,914 3,825,733 3,697,043
10(a) Amounts due from Related Companies Relationship DGS Holdings (Pvt) Ltd. Related Company 141,220 - 141,220 - Ceylinco Insurance Company (Pvt) Ltd.(Maldives) Subsidiary - - 53,285 67,230 CIESOT (Pvt) Ltd. (Note 10(c)) Related Company - 242,629 - 242,629 Ceylinco Investcorp (Pvt) Ltd. Subsidiary - - 24,240 66,250 Ceylinco Ltd Related Company - 1,746 - 1,746 141,220 244,375 218,745 377,855
10(b) Staff Loans At the beginning of the year 432,983 430,066 432,983 430,066 Loans Granted during the year 276,554 261,600 276,554 261,600 Repayments during the year (289,524) (258,683) (289,524) (258,683) At the end of the year 420,013 432,983 420,013 432,983
10(c) Ciesot (Pvt.) Limited was incorporated in the year 2000 for the sole purpose of acting as trustee of the trust fund established by Ceylinco Insurance PLC (CI PLC). The trustee holds the shares of CI PLC on behalf and for the exclusive benefit of the employees of CI PLC. The above amount represents the advances given by the Company to Ciesot (Pvt) Ltd. to purchase the above mentioned shares. During the year under review, the above amount was settled in full.
10(d) Income Tax Recoverable. Included in the Income Tax Recoverable is an amount of Rs.678,450,608 recognised as Notional Tax Credit available in the Life Division. The Notional Tax Credit available was recognised in the Balance Sheet based on its realisability in the foreseeable future. In arriving at the asset value as at the year end the following assumptions were used. 1. Increase in investment income - 13% per annum after year (2010-15.5%). 2. Management and commission expense will increase at 11% (2010-10%). 3. Disallowable expenses will increase at 4% per annum (2010-10%). 4. Loss deductible from taxable income on disposal of Fixed assets will increase at 5 % (2010-5%). 5. Discount rate 11% (2010 - 9%).
Ceylinco Insurance PLC 184 Annual Report 2011 10(e) Vehicle Loans Consolidated Company 2011 2010 2011 2010 Rs.’000 Rs. ‘000 Rs.’000 Rs.’000
At the beginning of the year 258,705 280,489 258,705 280,489 Loans Granted during the year 57,081 39,056 57,081 39,056 Repayments during the year (96,962) (60,840) (96,962) (60,840) At the end of the year 218,824 258,705 218,824 258,705
11. Insurance Provision - Life Long duration contract liabilities included in the Life Insurance Fund, result primarily from traditional participating and non-participating life insurance products. Short duration contract liabilities are primarily accident and health insurance products. The insurance provision has been established based upon the following.
- Interest rates which vary by product and as required by Regulations issued by the Insurance Board of Sri Lanka (IBSL).
- Mortality rates based on published mortality tables adjusted for actual experience as required by Regulations issued by the IBSL.
- Surrender rates based upon actual experience.
The amount of policyholder dividend to be paid is determined annually by the Company. The dividend includes life policyholders share of net income that are required to be allocated by the insurance contract or by insurance regulation.
The valuation of the Life Insurance Fund as at 31 st December 2011 was made by M /S Towers Watson Risk Consulting (Pte.) Limited , who recommended a sum of Rs.700 Million to be transferred from the Life Insurance Fund to the Shareholders’ Fund for the year 2011. Subsequent to the transfer of Rs.696 million(after deducting shareholders expenses from the Rs 700 Mn transfer)the Life Insurance fund stands at Rs 38,203 Million , including the liability in respect of bonuses declared up to and including for the year 2011.In the opinion of the Consultant Actuary, the admissible assets of the Life Insurance Fund as at 31 st December 2011 is adequate to cover the liabilities of the fund and the solvency margin requirement prescribed under section 26 of the Regulation of the Insurance Industry Act No. 43 of 2000 and Regulation of Insurance Industry (Amendment) Act, No.3 of 2011.The Life fund also carried forward a surplus for future growth and contingencies.
Movement in Life Insurance fund 2011 2010 Rs.’000 Rs. ‘000 Rs.’000 Rs.’000
At the beginning of the Year 31,868,141 26,449,967 Increase in Life Fund 7,031,437 6,009,169 Transfer to Shareholders’ Funds (696,105) 6,335,332 (590,995) 5,418,174 At the end of the Year 38,203,473 31,868,141
Ceylinco Insurance PLC 185 Annual Report 2011 Notes to the Financial Statements
12 Insurance Provision - Non - Life Consolidated Company 2011 2010 2011 2010 Rs.’000 Rs. ‘000 Rs.’000 Rs.’000 The Non-Life Insurance Reserves as shown in the Balance Sheet represents the following, Reserve for Unearned Premium 12(a) 4,712,020 4,257,501 4,659,857 4,236,873 Reserve for Deferred Acquisition Cost 12(b) (558,877) (514,100) (549,513) (507,080) Reserve for Gross Claims payable 12(c) 2,191,942 2,186,812 2,130,018 2,146,735 Reserve for Deferrred Reinsurance commission 111,663 129,948 110,841 129,169 Provision for Claims Incurred But Not Reported (IBNR) and Incured But Not Enough Reported (IBNER) 203,784 164,883 185,548 147,187 6,660,532 6,225,043 6,536,751 6,152,883 12(a) Reserve for Unearned Premium At the Beginning of the Year 4,257,501 3,971,041 4,236,873 3,928,126 Subsidiary balance - (3,639) - - Increase/(Decrease) during the Year 454,519 290,099 422,984 308,747 At the End of the Year 4,712,020 4,257,501 4,659,857 4,236,873 12(b) Reserve for Deferred Acquisition Cost At the Beginning of the Year 514,100 458,828 507,080 456,097 Subsidiary balances - 4,289 - - (Increase)/Decrease during the Year 44,777 50,983 42,432 50,983 At the End of the Year 558,877 514,100 549,513 507,080 12(c) Reserve for Gross Claims payable At the Beginning of the Year 2,186,812 2,245,243 2,146,735 1,692,086 Subsidiary balance - 17,648 - - Claims Incurred during the Year (Note18) 5,018,890 5,649,000 4,970,983 5,525,315 Claims Paid during the Year (5,013,760) (5,725,079) (4,987,700) (5,070,666) At the End of the Year 2,191,942 2,186,812 2,130,018 2,146,735
Significant delays occur in the notification of claims and a substantial measure of experience and judgment is involved in assessing outstanding liabilities, the ultimate cost of which cannot be known with certainty as of the balance sheet date.
The incurred but not reported and incurred but not enough reported (IBNER) claim reserve have been actuarially computed by M/S K.A.Pandit - Consultants and Actuaries
The valuation is based on internationally accepted actuarial methods, and is performed on an annual basis.
The reserves are determined based on the information currently available .However, it is inherent to the nature of the business written that the ultimate liability may vary as a result of subsequent developments.
12(d) Non-Life Technical Reserves Company 2011 2010 Rs.’000 Rs.’000 Non - Life insurance Provisions 6,536,751 6,152,883 Reinsurance Receivable on Outstanding claims (1,831,062) (2,322,006) 4,705,689 3,830,877
Ceylinco Insurance PLC 186 Annual Report 2011 13 Other Liabilities Consolidated Company 2011 2010 2011 2010 Rs.’000 Rs. ‘000 Rs.’000 Rs.’000
Government Levies 309,435 186,964 290,284 186,964 Other Creditors and Accrued Expenses 2,032,018 1,415,014 1,129,956 981,492 Amounts due to Related Companies (Note 13 (a)) 87,607 81,429 87,607 81,429 Loans 294,575 36,989 - - Death Claims payable 69,736 72,671 69,736 72,671 2,793,371 1,793,067 1,577,583 1,322,556
13(a) Amounts due to Related Companies Relationship Ceylinco Ltd. Other Related Company 117,901 117,901 117,901 117,901 Less - Interest in Suspense (30,294) (36,472) (30,294) (36,472) 87,607 81,429 87,607 81,429
The balance due to Ceylinco Ltd. Includes the liability incurred due to the purchase of the floor of Ceylinco House reference to the Note 7(b) to the financial statements.
Consolidated Company 2011 2010 2011 2010 Rs.’000 Rs. ‘000 Rs.’000 Rs.’000
Installments due within one year - - - - Installments due after one year 117,901 117,901 117,901 117,901 117,901 117,901 117,901 117,901
14 Stated Capital Consolidated Company 2011 2010 2011 2010 Rs.’000 Rs. ‘000 Rs.’000 Rs.’000 Classes of Shares 97,500,000 Ordinary Shares 2,500,000 Unclassified Shares 100,000,000 Non Voting Ordinary Shares
Issued & Fully Paid Ordinary shares - Voting (14a) 200,000 200,000 200,000 200,000 Ordinary shares - Non Voting (14b) 1,122,534 1,122,534 1,122,534 1,122,534 Share Premium (14 c) 2,288 2,288 2,288 2,288 1,324,822 1,324,822 1,324,822 1,324,822
The holders of ordinary shares - voting are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.
Ceylinco Insurance PLC 187 Annual Report 2011 Notes to the Financial Statements
Consolidated Company 2011 2010 2011 2010 Rs.’000 Rs. ‘000 Rs.’000 Rs.’000
14(a) Ordinary Shares - Voting Balance as at year end 200,000 200,000 200,000 200,000 20,000,000 Ordinary Shares Voting 200,000 200,000 200,000 200,000
14(b) Ordinary Shares - Non - Voting Balance as at year end 1,122,534 1,122,534 1,122,534 1,122,534 6,414,480 Ordinary shares - NonVoting 1,122,534 1,122,534 1,122,534 1,122,534
14(c) Share Premium Balance as at year end 2,288 2,288 2,288 2,288 2,288 2,288 2,288 2,288
15 Revenue Consolidated Company 2011 2010 2011 2010 Rs.’000 Rs. ‘000 Rs.’000 Rs.’000
Gross Written Premium (Note 16) 20,198,243 18,020,408 19,857,155 18,010,729 Less : Premium Ceded to Reinsurers (Note 17) (2,304,434) (1,800,475) (2,071,748) (1,812,969) Net Written Premium 17,893,809 16,219,933 17,785,407 16,197,760 Net Change in Reserve for unearned Premium (461,131) (289,780) (422,984) (308,747) Net Earned Premium 17,432,678 15,930,153 17,362,423 15,889,013 Investment income 4,120,341 3,767,329 4,119,702 3,754,358 Revenue from Other Operations 497,493 401,900 - - Other Income 404,075 172,999 425,974 137,991 Revenue 22,454,587 20,272,382 21,908,099 19,781,362
16 Gross Written Premium The premium income for the year by major classes of business is as follows.
Consolidated Company 2011 2010 Change 2011 2010 Change Rs.’000 Rs.’000 % Rs.’000 Rs.’000 %
16.1 Non - Life Insurance Fire 1,195,355 982,786 22 1,144,420 1,099,333 4 Motor 6,036,611 5,644,022 7 6,030,572 5,636,163 7 Marine 516,474 408,634 26 385,990 346,035 12 Miscellaneous 1,993,259 1,684,554 18 1,888,067 1,663,415 14 Engineering 555,732 411,653 35 509,121 377,024 35 Employers’ Liability 84,869 102,638 (17) 83,042 102,638 (19) 10,382,300 9,234,287 12 10,041,212 9,224,608 9
The Gross written premium of 2011 includes Rs.15,993,161 and US$ 14,405 which are collected on behalf of coinsurance partners. (for 2010 - Rs. 29,427,000)
Ceylinco Insurance PLC 188 Annual Report 2011 Consolidated Company 2011 2010 Change 2011 2010 Change Rs.’000 Rs.’000 % Rs.’000 Rs.’000 %
16.2 Life Insurance 9,815,943 8,786,121 12 9,815,943 8,786,121 12 Total Gross Written premium 20,198,243 18,020,408 12 19,857,155 18,010,729 10 Annualised New Business Life premium 3,502,889 3,190,323 10 3,502,889 3,190,323 10
17 Premium Ceded to Reinsurers 17.1 Non- Life Insurance Fire 932,967 732,052 27 883,577 838,324 5 Motor 100,030 108,015 (7) 99,605 107,550 (7) Marine 241,125 171,538 41 117,144 112,604 4 Miscellaneous 402,904 360,488 12 379,770 359,851 6 Engineering 381,796 273,391 40 347,683 239,649 45 Employers’ Liability 9,185 8,723 - 7,542 8,723 2,068,007 1,654,207 25 1,835,321 1,666,701 10
National Insurance Trust Fund Compulsory Reinsurance Cessions 267,213 166,249 61 267,213 166,249 61 Striike , Riots, Civil Commotion and Terrorism 464,692 470,889 (1) 464,692 470,889 (1) Foreign ReInsurers 1,318,525 987,642 34 1,085,839 1,000,136 9 Local coinsurance partners 17,577 29,427 17,577 29,427 2,068,007 1,654,207 25 1,835,321 1,666,701 10
17.2 Life Insurance Foreign Reinsurers 236,427 146,268 62 236,427 146,268 62 Total Premium Ceded to Reinsurers 2,304,434 1,800,475 28 2,071,748 1,812,969 14
18 Insurance Claims and Benefits (Net) 18.1 Non- Life Insurance Consolidated Company 2011 2010 2011 2010 Rs.’000 Rs. ‘000 Rs.’000 Rs.’000
Gross Claims Incurred 5,038,270 5,649,000 4,970,983 5,525,315 Reinsurance Recoveries (552,976) (1,301,636) (495,238) (1,185,451) Net Claims Incurred 4,485,294 4,347,364 4,475,745 4,339,864
The analysis by major classes of business is as follows. Fire 202,243 239,987 201,582 209,404 Motor 3,249,029 3,349,682 3,246,793 3,377,785 Marine 90,894 95,730 95,435 94,798 Miscellaneous 732,369 520,775 721,435 516,437 Engineering 172,738 98,479 172,480 98,729 Employer’s Liability 38,021 42,711 38,020 42,711 4,485,294 4,347,364 4,475,745 4,339,864
Ceylinco Insurance PLC 189 Annual Report 2011 Notes to the Financial Statements
18.2 Life Insurance Consolidated Company 2011 2010 2011 2010 Rs.’000 Rs. ‘000 Rs.’000 Rs.’000
Gross claims and benefits Claims - death,disability and hospitalisation 474,201 499,738 474,201 499,738 Policy Maturities 1,444,870 1,248,352 1,444,870 1,248,352 Interim payments on Anticipated Endowment plans 653,981 585,976 653,981 585,976 Surrenders 420,341 337,557 420,341 337,557 Cash Bonus expenses 38,152 38,679 38,152 38,679 Annuities 24,755 47,081 24,755 47,081 3,056,300 2,757,383 3,056,300 2,757,383 Reinsurance recoveries (110,005) (72,022) (110,005) (72,022) Life Insurance net claims and benefits 2,946,295 2,685,361 2,946,295 2,685,361
Total Insurance claims and benefits (net) 7,431,589 7,032,725 7,422,040 7,025,225
19. Income from Investments Interest Income (19.1) 3,832,871 3,555,015 3,813,507 3,542,044 Dividend Income 82,335 35,253 101,060 35,253 Gain on Sale of Shares 115,004 131,453 115,004 131,453 Income from Investment Property 90,131 45,608 90,131 45,608 4,120,341 3,767,329 4,119,702 3,754,358
19.1 Interest Income Interest Income from Government Securities Treasury Bonds 1,900,805 1,684,669 1,900,805 1,684,669 Repurchase agreements(net) 30,653 29,625 29,837 29,625
Interest Income from Corporate Debt Debentures 362,487 285,520 362,487 285,520 Commercial papers (485) 4,739 (485) 4,739 Fixed Deposits 1,444,821 1,457,528 1,428,996 1,444,557 Interest on Loans 11,014 30,253 11,014 30,253 Other interest Income 83,576 62,681 80,853 62,681 3,832,871 3,555,015 3,813,507 3,542,044
20. Other Income Gain on disposal of Property, Plant & Equipment 280,089 27,680 279,214 23,443 Gain /( Loss) on Translation of Foreign Currency (10,693) (1,461) 6,742 (324) Rent Income 2,626 4,200 2,626 4,200 Interest on Maldives current account - - 9,961 19,124 Profit on joint product Venture 44,978 20,948 44,978 20,948 Other Income 87,075 121,632 82,453 70,600 404,075 172,999 425,974 137,991
Ceylinco Insurance PLC 190 Annual Report 2011 21 Other Operating, Investment related and Administrative Expenses
Consolidated Company 2011 2010 2011 2010 Rs.’000 Rs. ‘000 Rs.’000 Rs.’000
Staff expenses (Note 21.1) 2,510,556 2,209,473 2,413,049 2,145,855 Operating expenses 1,709,675 1,424,350 1,582,794 1,354,382 Selling expenses 779,702 760,520 754,215 731,049 Other expenses (Note 21.2) (15,255) 217,777 (15,255) 184,983 4,984,678 4,612,120 4,734,803 4,416,269
21.1 Staff Expenses Wages and Salaries Including Bonus and Incentives 1,746,971 1,480,062 1,679,191 1,448,309 Contributions to defined contributions Plans Employees’ Provident Fund 162,946 141,658 157,045 138,568 Employees’ Trust fund 40,735 35,424 39,261 34,642 Defined Benefit Plan Cost - Retiring Gratuity 185,570 168,566 181,885 158,781 Other Expenses 374,334 383,763 355,667 365,555 2,510,556 2,209,473 2,413,049 2,145,855
21.2 Other Expenses Provision /(Reversal) for fall in value of Investments - Quoted 47,759 (6,083) 47,759 (6,083) - Unquoted (63,014) 15,605 (63,014) 15,605 Write off of receivables - 208,255 - 175,461 (15,255) 217,777 (15,255) 184,983
22 Profit from operations Profit from operations for the year is stated after charging the following expenses. Auditors’ remuneration-Audit Fee 5,413 5,166 4,332 4,200 Depreciation 396,126 377,571 298,299 299,265 Legal expenses 5,605 10,538 5,605 10,538 Donations 1,600 4,489 1,600 4,489 Directors’ Remuneration & Fees 427,982 304,221 409,981 297,154
23 Share of Profit(Loss) from Associates ( Net of Tax) Group 2011 2010 Rs.’000 Rs.’000
Ceylinco Homes International Ltd. 872 568 Citizens Development Business Finance PLC 191,105 104,062 L&T Inforcity Lanka (Pvt) Ltd. - (33,685) 191,977 70,945
Ceylinco Insurance PLC 191 Annual Report 2011 Notes to the Financial Statements
24 Income Tax Expense 24.1 Income tax expense is made up as follows. 2011 2010 2011 2010 Rs.’000 Rs. ‘000 Rs.’000 Rs.’000
Taxation on current year profit 115,646 160,991 102,361 156,923 Under provision of previous year 39,312 (26,227) 39,366 (26,227) Charge/(Reversal) of deferred tax 8,369 (5,734) - - 163,327 129,030 141,727 130,696
24.2 Tax Reconciliation Statement Company Reconciliation of effective tax rate 2011 2010 Rs.’000 Rs.’000
Profit for the period 1,129,331 803,287 Total income tax expense 141,727 130,696 Profit liable for income tax 1,271,058 933,983 Profits from Life Insurance business (696,105) (590,995) Profits Liable for income tax-General Insurance 574,953 342,988 Income tax using the Company’s domestic tax rate 28.00% 160,987 35.00% 120,046 Tax exempt income (20.92%) (120,303) (1.26%) (59,562) Net non-deductible/(deductible) expenses 19.69% 113,208 44.82% 177,091 Tax effect of loss claimed for the year (8.96%) (51,531) (28.64%) (83,151) Social responsibility levy 0% - 0.79% 2,499 Over / (Under) Provision of Previous Years 6.85% 39,366 0.58% (26,227) 24.65% 141,727 51.31% 130,696
Group Reconciliation of effective tax rate 2011 2010 Rs.’000 Rs.’000
Profit for the period 1,392,784 1,001,613 Total income tax expense/(income) 163,327 129,030 Profit before income Tax 1,556,111 1,130,643 Profit from Life business (696,105) (590,995) Accounting (profits)/losses of subsidiaries exempt from taxes (49,283) (124,029) Accounting (profits)/losses of subsidiaries which are tax losses 82 228 Profits liable for income tax 810,805 415,847 Income tax using the Company’s domestic tax rate 28.00% 227,025 35.00% 145,546 Tax exempt income (23.11%) (187,374) (2.05%) (81,058) Net non-deductible/(deductible) expenses 15.86% 128,592 42.22% 177,091 Loss claimed for the year (6.48%) (52,604) (26.68%) (83,151) Social responsibility levy 0% 7 0.74% 2,563 Over / (Under) Provision of Previous Years 4.8% 39,312 0.54% (26,227) 19.11% 154,958 49.77% 134,764
Ceylinco Insurance PLC 192 Annual Report 2011 *Taxable profits of Long-Term insurance business is computed on investment income less management expenses and allowable expenses. The Statutory income from business of Ceylinco Health Care Services Ltd is exempt from income tax for a period of 10 years from the date of commencement of commercial operations under the section 17(2) of BOI Act, No. 4 of 1978. The exemption continues until year of assessment 2010/2011. Other income of the Company is liable for taxation at the normal rate. The Statutory income from business of Ceypower Cascades (Pvt) Ltd is exempt from income tax for a period of 5 years from the date of commencement of commercial operations under the section 17(2) of BOI Act, No. 4 of 1978. The exemption expired last year and the company is liable for 10% tax on the income for the year of assessment 2010/2011. The Statutory income from business of Cey Hydro Developers (Pvt) Ltd is exempt from income tax for a period of 5 years from the date of commencemen of commercial operations under the section 17(2) of BOI Act, No. 4 of 1978. The exemption continues until year of assessment 2013/2014. Other income of the Company is liable for taxation at the normal rate.
24.3 Deferred Tax Assets Company/Group - unrecognized deferred tax assets Deferred tax assets have not been recognised in respect of the following items: 2011 2010 Rs.’000 Rs.’000 Tax losses - 300,859 Net deductible temporary difference - 300,859
Movement in unrecognized deferred tax assets / (liabilities) Deferred tax assets and liabilities, and their movements during the year, have not been recognized in respect of the following;
Balance as at Reverse during Recognized during Balance as at 1 Jan 2011 the year the year 31 Dec 2011 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Tax losses 300,859 300,859 - - 300,859 300,859 - -
Company Recognized deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following: Assets Liabilities Net 2011 2010 2011 2010 2011 2010 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Property, plant and equipment - - (496,110) (619,247) (496,110) (619,247) Tax losses and Gratuity 985,345 1,108,482 - - 985,345 1,108,482 Revaluation Reserve - - (184,561) - (184,561) - Net deferred tax asset / (liability) 985,345 1,108,482 (680,671) (619,247) 304,672 489,235
Movement in recognised Deferred tax assets / liabilities during the year Balance as at Recognized in Recognized Balance as at 1 Jan 2011 profit or loss in Equity 31 Dec 2011 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Property, plant and equipment (619,247) 123,137 - (496,110) Tax losses and Gratuity 1,108,482 (123,137) - 985,345 Revaluation Reserve (184,561) (184,561) 489,235 - (184,561) 304,672
Ceylinco Insurance PLC 193 Annual Report 2011 Notes to the Financial Statements
24.3 Deferred Tax Assets (Contd.)
Group Recognized deferred tax assets Assets Liabilities Net 2011 2010 2011 2010 2011 2010 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000
Property, plant and equipment - - (496,277) (619,247) (496,277) (619,247) Tax losses and Gratuity 991,772 1,108,482 991,772 1,108,482 Revaluation Reserve - - (184,561) - (184,561) - Net deferred tax asset / (liability) 991,772 1,108,482 (680,838) (619,247) 310,934 489,235
Movement in recognised Deferred tax assets / liabilities during the year
Balance as at Recognized in Recognized Balance as at 1 Jan 2011 profit or loss in Equity 31 Dec 2011 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Property, plant and equipment (619,247) 122,970 - (496,277) Tax Losses and Gratuity 1,108,482 (116,710) - 991,772 Revaluation Reserve - - (184,561) (184,561) 489,235 6,260 (184,561) 310,934
24.4 Group Recognized deferred tax liabilities Assets Liabilities Net 2011 2010 2011 2010 2011 2010 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000
Property, plant and equipment - 5,734 (10,624) - (10,624) 5,734 Tax losses and Gratuity 3,698 3,698 Revaluation Reserve - - (30,281) (31,101) (30,281) (31,101) Net deferred tax asset / (liability) 3,698 5,734 (40,905) (31,101) (37,207) (25,367)
Movement in recognised Deferred tax assets / liabilities during the year
Balance as at Recognized in Recognized Balance as at 1 Jan 2011 profit or loss in Equity 31 Dec 2011 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Property, plant and equipment 5,734 (16,358) - (10,624) Tax Losses and Gratuity 3,698 3,698 Revaluation Reserve (31,101) - 820 (30,281) (25,367) (12,660) 820 (37,207)
Ceylinco Insurance PLC 194 Annual Report 2011 25 Earnings per Share Basic Earnings per Share has been calculated by dividing profit after taxation by the weighted average Ordinary Shares in issue as at the year.
Consolidated Company 2011 2010 2011 2010 Profit for the year (Rs.’000) 1,372,169 961,639 1,129,331 803,287 Weighted Average Number of Ordinary Shares (‘000) 26,414 26,414 26,414 26,414 Basic Earnings per Ordinary Share (Rs.) 51.95 36.41 42.75 30.41
There were no potential dilutive Ordinary Shares outstanding at any time during the year. Therefore, diluted earnings per share is same as basic earnings per share shown above.
26 Dividend per Share Company 2011 2010 Final Proposed Dividend (Rs.’000) 171,694 145,280 No. of Shares in issue for the year (‘000) 26,414 26,414 Dividend per share (Rs.) Proposed Final 6.50 5.50
The Board of Directors has proposed a Final dividend of Rs.6.50 per share (Rs. 171,694,120 /-) for the year ended 31st December, 2011 which is to be approved by the shareholders at the Annual General Meeting to be held on 03rd. April, 2012. As stipulated by Sri Lanka Accounting Standards No.12 (Revised 2005)- Events After the Balance Sheet Date, this proposed dividend is disclosed, but not recognized as a liability as at 31st December, 2011.
However, for the purpose of computing Dividend per Share the final dividend to be approved has been taken into consideration.
Ceylinco Insurance PLC 195 Annual Report 2011 Notes to the Financial Statements
27.1 Related Party Transaction Nature of Transaction Amount of transactions / outstanding balances (Rs.) i. (a) The aggregate value of transactions and outstanding balances relating to key management personnel and entities over which they have control or significant influence were as follows Directors Mr.J.G.P.Perera, Mr. A.R.Gunawardena, Aggregated amounts of premium 30,622,663 Mr. R.Renganathan, Mr.H.D.K.P.Alwis, received from the group Mr.W.C.J.Alwis, Mr.P.D.M.Cooray, companies under normal Mr.P.M.B.Fernando, Mr.P.A.Jayawardena, terms of insurance contracts Mr.Nugewela, Mr.T.N.M.Peiris, Mr.E.T.L. Ranasinghe Mr.D.W.P Upali, Mr.K.I.Dharmawardena, Mr.D.H.J.Gunawardena, Gen.C.S.Weerasooriya (Retd.), Mr.S.R.Abeynayake Aggregated amounts of claim paid 50,521,184 to the group companies under normal terms of insurance contracts
(b) Transactions with Associate Companies Name of the company Nature of the transaction Amount of the transaction (Rs.) Citizen Development Business Finance PLC Insurance Premium received 19,990,949 Citizen Development Business Finance PLC Purchase of Shares 207,727,070 Citizen Development Business Finance PLC Sale of Shares 71,791,820
(c) Transaction entered into where the company has the ability to control the other party as subsidiaries are listed below; Name of the company Nature of the transaction Amount of the transaction (Rs.) American Education Centre Pvt Ltd Dividend Received 802,500 American Education Centre Pvt Ltd Insurance Premium received 4,150,774 Ceylinco Investcorp (Pvt.)Ltd. Fund Management Fee paid 5,736,726 Ceypower Cascades (Pvt)Ltd Insurance Premium received 103,052 Ceypower Cascades (Pvt)Ltd Dividend Received 18,274,922 CEG Education Holdings (Pvt) ltd Insurance Premium received 172,371 International College of Business & Technologies Ltd. Insurance Premium received 2,954,540 International College of Business & Technologies Ltd. Dividend Received 2,329,450 Ceylinco Insurance Company(Pvt) Ltd-Maldives Interest Income received 5,599,302 Ceylinco Insurance Company(Pvt) Ltd-Maldives Reinsurance Settlements 158,926,431 Ceylinco Insurance Company(Pvt) Ltd-Maldives Reinsurance Premium Received 149,370,140 Ceylinco Insurance Company(Pvt) Ltd-Maldives Management Fee received 4,362,000 Ceylinco Health Care Services Ltd Medical Fees for staff & Customers 5,903,715 Ceylinco Health Care Services Ltd Insurance Premium received 1,586,994 Ceylinco Seraka Ltd Service Charges 4,410,000 Serene Resorts Ltd Training Expenses 4,675,000 CAS Recoveries & Custodial Services (Pvt) Ltd Settlement of Promissory Notes 50,000,000 Ceylinco Investcorp (Pvt.)Ltd. Settlement of Promissory Notes 42,010,000 Wycherley International School (Pvt)Ltd Insurance Premium received 1,205,746
Ceylinco Insurance PLC 196 Annual Report 2011 Name of the company Nature of the transaction Amount of the transaction (Rs.) (ii ) Key Management Personnel Compensation Key Managerial Persons include members of the Board of Directors; Short-term employee benefits received from the Company 337,612,814 Short-term employee benefits received from the Subsidiaries 18,001,000 Short-term employee benefits received from the Associates - Other long term /post employment benefits 72,368,156
(iii ) Other related party transactions These are non insurance related transactions entered into with related companies.
(a ) Non Life Division Other Companies* Other Transaction 2,117,220 * A list of related companies is given below; Ceylinco Group Library (Pvt) Ltd, Ceylinco Hotels Ltd. Ceylinco Printing & Stationery (Pvt.) Ltd, & Ceylinco Express (Pvt) Ltd.
27.2 (a) Balance outstanding as at 31 December 2011 in respect of premium receivables from related entities Non Life Division 2011 2010 Name of the company Amount (Rs.) Amount (Rs.) American Education Centre Ltd. 306,135 251,052 Asian Finance Ltd. - 77,487 Blue Diamonds Jewellery Worldwide PLC - 401,286 Ceylinco Tourist Hotels Ltd. - 466,739 Citizen Development Business Finance PLC 2,193,474 13,760 Nation Lanka Finance PLC - 58,399 The Finance Ideal Homes Ltd. - 433,879 Ceylinco Healthcare Services (Pvt) Ltd. 1,340,648 - Wycherley International School (Pvt)Ltd. 1,205,746 -
Ceylinco Insurance PLC 197 Annual Report 2011 Notes to the Financial Statements
(b) Balance outstanding in respect of loans and advances granted to related companies, Outstanding Balance(Rs.) Name of the company Description 2011 2010
The Finance & Guarantee Co.Ltd. Investment in Interest Bearing Short term Investment at an interest rate 22% per annum on 05/11/2008 - 15,000,000 Ceylinco Investcorp (Pvt)Ltd Investment in Commercial Papers at the rate of 16% p.a. in 2008. - 183,254,221
Ceylinco Grameen Development Fund Company (pvt) Ltd. Investment in Promissory Note at an interest rate of 15% per annum for a period of one Year, which was renewed on 03/12/2009 - 2,430,000
(c ) Following Investment/Advances were settled during the year by transfering properties but ownership of these not yet transferred due to legal impediments
Amount/Outstanding Amount (Rs.) Name of the company Description 2011 2010
DGS Holdings (Pvt) Ltd. Other Assets/Investment Property - 236,088,000
27.3 (a) Ceylinco Insurance Co Ltd Employees Gratuity Trust fund Following directors of the Company are also trustees of the Gratuity Trust Fund Mr. A.R.Gunawardena, Mr. R.Renganathan, Mr.W.C.J.Alwis, Mr. T.N.M. Peiris ,Mr.H.D.K.P. Alwis,Mr. E.T.L. Ranasinghe,Mr. D.W.P. Upali,. Mr.P.D.M. Cooray.
Transactions during the year Amount (Rs.) Ceylinco Non-Life Division contribution 130,174,635 Ceylinco Life Division contribution 51,140,131
Other Transactions by the Gratuity Trust Fund The Gratuity Trust fund purchased Rs. 497,367,338 shares of The Golden Key Eye Hospital (Pvt.) Ltd during the previous year, whereas Rs. 297,000,000 was advanced in 2008.
The Gratuity Trust fund has invested Rs. 338,452,497 in ordinary shares of Ceylinco Insurance PLC .
(b) Pension Fund The following directors of the Company are also trustees of Pension Fund Mr. A.R.Gunawardena, Mr. R. Renganathan, Mr.T.N.M.Peiris,Mr. E,T.L. Ranasinghe, Mr. P.D.M. Cooray, Mr.P.A. Jayawardane, Mr.W.C.J. Alwis and Mr.H.D.K.P. Alwis.
Transactions during the year Amount (Rs.) Ceylinco Life Division contribution to the Pension Fund 35,636,744 Ceylinco Non - Life contribution Pension Fund 53,706,683 Total 89,343,427
Ceylinco Insurance PLC 198 Annual Report 2011 28 Commitments There are no significant capital expenditure commitments other than the following as at 31.12.2011 The Company has committed to pay Operating lease rentals on vehicles amounting to Rs.181,802,992.
29 Contingent liabilities In the opinion of the Directors , litigation which is currently against the Company in the normal course of business, will not have a significant impact on the reported financial results or future operations of the Company. Hence, there are no significant contingent liabilities as at the Balance Sheet date except for the following.
In the event, if there is a shortfall of the “Gratuity Trust Fund’ against its obligations, an additional provision may need to be incorporated in the books of Ceylinco Insurance PLC.
30 Assets Pledged The following assets have been pledged as security for liabilities.
Nature of Assets Nature of Liability Carrying Amount Included Pledged under Rs.’000
Building-Non Life Division Mortgaged to Seylan Bank PLC by Golden Key Credit Card Company Limited to 153,000 Investment obtain loan facility (Note 3b) Property
Fixed Deposit-Non Life Mortgaged to Seylan Bank PLC to obtain bank 61,700 Investments Division overdraft facilities.
Treasury Bonds-Life Division Mortgaged to Seylan Bank PLC to 167,000 Investments obtain banking facilities.
Fixed Deposits-Life Division Mortgaged to Sampath Bank PLC to 2,500 Investments obtain banking facilities. Mortgaged to Commercial Bank of 1,800 Investments Ceylon to obtain banking facilities
31 Events after the Balance Sheet Date No circumstances have arisen since the Balance Sheet date which would require adjustment or disclosure in financial statements other than those disclosed in Note 26.
Ceylinco Insurance PLC 199 Annual Report 2011 Notes to the Financial Statements
32 Retirement Benefits to Employees Following contributions have been made to Employees’ Provident Fund & Employees’ Trust Fund during the year.
Defined contribution plans 2011 2010 Rs.’000 Rs.’000
E.P.F & E.T.F Contributions Employees’ provident Fund (EPF) Employers’ Contribution 157,045 138,568 Employees’ Contribution 104,697 92,378
Employees’ Trust Fund (ETF) 39,261 34,642
Defined Benefit Plans The Company makes contributions monthly (15% of monthly salary of employees) to a non-contributory defined benefit plan that pays Gratuity for employees upon retirement. The Plan entitles a retired employee to receive a payment equal to the last drawn monthly salary multiplied by the number of years of service by the employee.
The assets of the fund, which are independently administered by the Trustees as per the provision of the Trust Deed, are held separately
An Actuarial valuation of the Gratuity Fund was carried out as at 31st December 2011 by M/S K.A.Pandit (consultants & Actuaries ) ,a firm of Professional Actuaries. The valuation method used by the actuaries to value the Fund is the “Projected Unit Credit Method” the method recommended by the Sri Lanka Accounting Standard No.16 Employee Benefits.
2011 2010 Rs.’000 Rs.’000
Present value of unfunded obligations - - Present value of funded obligations 1,309,680 1,176,977 Total present value of obligations 1,309,680 1,176,977 Fair value of plan assets (2,335,641) (1,528,598) Excess of plan assets above present value of obligations (1,025,961) (351,621)
Plan assets comprise: 2011 2010 Rs.’000 Rs.’000
Company’s own ordinary shares 1,352,531 657,911 Other Equity securities 500,167 500,167 Government Treasury Bonds 166,003 131,226 Debentures 30,500 30,500 Shor term Investment 50,000 165,259 Other assets 236,440 43,535 2,335,641 1,528,598
Ceylinco Insurance PLC 200 Annual Report 2011 32 Retirement Benefits to Employees (Contd.) Movement in the present value of the defined benefit obligations
2011 2010 Rs.’000 Rs.’000 Defined benefit obligations at 1 January 1,176,977 1,025,395 Benefits paid by the plan (59,697) (45,300) Interest Cost 117,698 102,540 Current service costs 85,332 79,613 Actuarial (gains) / loss on obligations (10,630) 14,729 Defined benefit obligations at 31 December 1,309,680 1,176,977
Retirement Benefits to Employees (Continued) Movement in the plan assets Fair value of plan assets at 1 January 1,528,598 1,106,083 Contributions paid into the plan 181,597 161,195 Benefits paid by the plan (59,698) (45,300) Expected return on plan assets 152,860 110,608 Actuarial (losses) gains recognised in equity 532,284 196,012 Fair value of plan assets at 31 December 2,335,641 1,528,598
Actual Return on Plan Assets Expected return on plan assets 152,860 110,608 Actuarial (losses) gains on Plan Assets 532,284 196,012 Actual return on plan assets 685,144 306,620
Reconciliation of the liability / (asset) Opening net liability/ (asset) (351,621) (80,688) Expense net of returns (492,744) (109,739) Contribution paid into the plan (181,597) (161,194) Closing Net Liability / (asset) (1,025,962) (351,621)
2011 2010 Actuarial assumptions Discount rate at 31 December 10.00% 10.00% Expected return on plan assets at 1 January 10.00% 10.00% Future salary increases 8.50% 8.50%
Assumptions regarding future mortality are based on 1967-70 mortality rable. The excess of the plan assets over the present value of the defined benefit obligation is not recognized in the Balance Sheet as an asset. Such excess will be recognized in the income statement in the expected average remaining working life of the employees.
33 Foreign currency translation 2011 2010 The principal exchange rates used for translation purposes were; Maldives Rufia Rs.7.48 Rs. 8.85
34 Comparative Information Previous year’s figures and phrases have been re-arranged whereveer necessary, to conform to the current year’s presentation.
Ceylinco Insurance PLC 201 Annual Report 2011 Quarterly Analysis 2011
Consolidated Statement of Income (values are to the nearest rupees thousand) 1st quarter 2nd quarter 3 rd quarter 4th quarter Total Jan- Mar.11 Apr- Jun.11 Jul- Sep.11 Oct- Dec.11 Jan- Dec.11
Revenues 5,314,395 5,352,897 5,594,288 6,193,007 22,454,587 Gross Written Premium 4,892,607 4,853,508 5,113,935 5,338,193 20,198,243 Less : Premium Ceded to Reinsurers (526,859) (531,321) (527,449) (718,805) (2,304,434) Net Written Premium 4,365,748 4,322,187 4,586,486 4,619,388 17,893,809 Net Change in Reserve for Unearned Premium (259,564) (926) (123,959) (76,682) (461,131) Net Earned Premium 4,106,184 4,321,261 4,462,527 4,542,706 17,432,678 Revenue from Other Operations 156,462 87,899 55,069 198,063 497,493 4,262,646 4,409,160 4,517,596 4,740,769 17,930,171 Benefits , Losses and Expenses Insurance Claims and Benefits (Net) (1,769,157) (1,907,486) (2,075,843) (1,679,103) (7,431,589) Increase in Life Insurance Fund (1,500,096) (1,641,896) (1,656,805) (1,536,535) (6,335,332) Underwriting and Net Acquisition Costs (494,283) (490,970) (492,907) (322,377) (1,800,537) (Including Reinsurance) Total Benefits , Losses and Expenses (3,763,536) (4,040,352) (4,225,555) (3,538,015) (15,567,458) Cost of Sales of Subsidiaries (19,421) (16,962) (18,916) (43,441) (98,740) (3,782,957) (4,057,314) (4,244,471) (3,581,456) (15,666,198) 479,689 351,846 273,125 1,159,313 2,263,973 Other Revenue Income from Investments 995,251 912,746 980,011 1,232,333 4,120,341 Other Income 56,498 30,991 96,681 219,905 404,075 Expenses Other Operating, Investment Related and Administrative Expenses (1,145,895) (1,110,507) (1,184,018) (1,544,258) (4,984,678) Depreciation (106,747) (96,758) (94,254) (98,367) (396,126) Profit from Operations 278,796 88,318 71,545 968,925 1,407,585 Interest Expense (27,447) (12,234) (24,017) 20,247 (43,451) Income from Associates 95,756 6,268 57,439 32,514 191,977 Profit Before Taxation 347,105 82,352 104,967 1,021,686 1,556,111 Income Tax Expense (40,274) (27,501) (11,251) (84,301) (163,327) Profit for the year 306,831 54,851 93,716 937,385 1,392,784
Company Statement of Income (values are to the nearest rupees thousand) 1st quarter 2nd quarter 3 rd quarter 4th quarter Total Jan- Mar.11 Apr- Jun.11 Julyl- Sep.11 Oct- Dec.11 Jan- Dec.11
Revenues 5,152,646 5,248,882 5,508,748 5,997,823 21,908,099 Gross Written Premium 4,829,291 4,769,671 5,057,454 5,200,739 19,857,155 Less : Premium Ceded to Reinsurers (487,410) (476,414) (493,558) (614,366) (2,071,748) Net Written Premium 4,341,881 4,293,257 4,563,896 4,586,373 17,785,407 Net Change in Reserve for Unearned Premium (248,019) 13,561 (124,613) (63,913) (422,984) Net Earned Premium 4,093,862 4,306,818 4,439,283 4,522,460 17,362,423 4,093,862 4,306,818 4,439,283 4,522,460 17,362,423 Benefits , Losses and Expenses Insurance Claims and Benefits (Net) (1,773,339) (1,901,516) (2,075,571) (1,671,614) (7,422,040) Increase in Life Insurance Fund (1,500,096) (1,641,896) (1,656,805) (1,536,535) (6,335,332) Underwriting and Net Acquisition Costs (492,942) (495,300) (498,297) (329,717) (1,816,256) (Including Reinsurance) Total Benefits , Losses and Expenses (3,766,377) (4,038,712) (4,230,673) (3,537,866) (15,573,628) Cost of Sales of Subsidiaries - - - - - (3,766,377) (4,038,712) (4,230,673) (3,537,866) (15,573,628) 327,485 268,106 208,610 984,594 1,788,795 Other Revenue Income from Investments 1,005,275 879,000 992,128 1,243,299 4,119,702 Other Income 53,509 63,064 77,337 232,064 425,974 Expenses Other Operating, Investment Related (1,099,412) (1,059,839) (1,140,615) (1,434,937) (4,734,803) and Administrative Expenses Depreciation (76,040) (76,383) (75,961) (69,915) (298,299) Profit from Operations 210,817 73,948 61,499 955,104 1,301,369 Interest Expense (11,010) (5,526) (23,635) 9,860 (30,311) Income from Associates - - - - - Profit Before Taxation 199,807 68,422 37,864 964,964 1,271,057 Income Tax Expense (39,283) (24,932) (10,073) (67,439) (141,727) Profit for the year 160,524 43,490 27,791 897,525 1,129,331
Ceylinco Insurance PLC 202 Annual Report 2011 Quarterly Analysis 2010
Consolidated Statement of Income (values are to the nearest rupees thousand) 1st quarter 2nd quarter 3 rd quarter 4th quarter Total Jan- Mar.10 Apr- Jun.10 Jul- Sep.10 Oct- Dec.10 Jan- Dec.10
Revenues 4,663,486 4,792,510 5,033,495 5,782,891 20,272,382 Gross Written Premium 4,414,245 4,072,874 4,451,839 5,081,450 18,020,408 Less : Premium Ceded to Reinsurers (476,130) (371,079) (412,361) (540,905) (1,800,475) Net Written Premium 3,938,115 3,701,795 4,039,478 4,540,545 16,219,933 Net Change in Reserve for Unearned Premium (258,183) 72,131 (126,815) 23,087 (289,780) Net Earned Premium 3,679,932 3,773,926 3,912,663 4,563,632 15,930,153 Revenue from Other Operations 85,361 121,700 80,692 114,147 401,900 3,765,293 3,895,626 3,993,355 4,677,779 16,332,053 Benefits , Losses and Expenses Insurance Claims and Benefits (Net) (1,651,418) (1,662,721) (1,822,173) (1,896,413) (7,032,725) Increase in Life Insurance Fund (1,295,116) (1,432,404) (1,441,604) (1,249,050) (5,418,174) Underwriting and Net Acquisition Costs (410,866) (427,049) (424,905) (349,657) (1,612,477) (Including Reinsurance) Total Benefits , Losses and Expenses (3,357,400) (3,522,174) (3,688,682) (3,495,120) (14,063,374) Cost of Sales of Subsidiaries (14,461) (17,155) (16,748) (19,142) (67,506) (3,371,861) (3,539,329) (3,705,430) (3,514,262) (14,130,880) 393,432 356,297 287,925 1,163,516 2,201,173 Other Revenue Income from Investments 848,223 840,607 977,025 1,101,474 3,767,329 Other Income 49,970 56,277 63,115 3,637 172,999 Expenses Other Operating, Investment Related and Administrative Expenses (1,056,961) (1,122,328) (1,093,124) (1,339,707) (4,612,120) Depreciation (91,885) (97,818) (91,044) (96,824) (377,571) Profit from Operations 142,779 33,035 143,897 832,096 1,151,810 Interest Expense (19,444) (20,674) (18,820) (33,174) (92,112) Income from Associates 17,600 9,841 23,912 19,592 70945 Profit Before Taxation 140,935 22,202 148,989 818,514 1,130,643 Income Tax Expense (27,108) (4,359) (39,093) (58,470) (129,030) Profit for the year 113,827 17,843 109,896 760,046 1,001,613
Company Statement of Income (values are to the nearest rupees thousand) 1st quarter 2nd quarter 3 rd quarter 4th quarter Total Jan- Mar.10 Apr- Jun.10 Jul- Sep.10 Oct- Dec.10 Jan- Dec.10
Revenues 4,558,489 4,662,544 4,936,038 5,624,291 19,781,362 Gross Written Premium 4,398,023 4,167,892 4,392,921 5,051,893 18,010,729 Less : Premium Ceded to Reinsurers (475,483) (449,447) (368,541) (519,498) (1,812,969) Net Written Premium 3,922,540 3,718,445 4,024,380 4,532,395 16,197,760 Net Change in Reserve for Unearned Premium (257,961) 51,753 (126,131) 23,592 (308,747) Net Earned Premium 3,664,579 3,770,198 3,898,249 4,555,987 15,889,013 3,664,579 3,770,198 3,898,249 4,555,987 15,889,013 Benefits , Losses and Expenses Insurance Claims and Benefits (Net) (1,649,059) (1,639,008) (1,826,316) (1,910,842) (7,025,225) Increase in Life Insurance Fund (1,295,116) (1,432,404) (1,441,604) (1,249,050) (5,418,174) Underwriting and Net Acquisition Costs (425,050) (432,321) (432,856) (360,040) (1,650,267) (Including Reinsurance) Total Benefits , Losses and Expenses (3,369,225) (3,503,733) (3,700,776) (3,519,931) (14,093,665) Cost of Sales of Subsidiaries - - - 0 - (3,369,225) (3,503,733) (3,700,776) (3,519,931) (14,093,665) 295,354 266,465 197,473 1,036,056 1,795,348 Other Revenue Income from Investments 846,711 839,885 977,232 1,090,531 3,754,359 Other Income 47,199 52,461 60,557 (22,226) 137,991 Expenses Other Operating, Investment Related and Administrative Expenses (996,982) (1,064,459) (1,053,461) (1,301,367) (4,416,269)
Depreciation (72,614) (74,599) (75,075) (76,977) (299,265) Profit from Operations 119,668 19,753 106,726 726,016 972,163 Interest Expense (7,162) (10,354) (10,975) (9,689) (38,180) Profit Before Taxation 112,506 9,399 95,751 716,327 933,983 Income Tax Expense (26,225) (3,427) (37,979) (63,065) (130,696) Profit for the year 86,281 5,972 57,772 653,262 803,287
Ceylinco Insurance PLC 203 Annual Report 2011 Ten Year Summary
60 5,917 31,463 476,098 2,073,881 13 10,764,853 398 770,065 7,801 1,737,122 598,980 1,007,771 8,675,540 6,871,165 8,675,540 6,871,165 36,955,617 30,643,765 25,031,117 19,385,321 16,235,632 13,614,690 10,920,581 9,282,918 8,945,046 36,955,617 30,643,765 25,031,117 19,385,321 16,235,632 13,614,690 10,920,581 9,282,918 8,945,046 50,687,933 43,413,858 40,107,053 32,366,724 26,711,940 22,137,723 17,785,641 12,912,039 11,880,180 8,219,849 6,874,506 6,282,460 4,505,361 3,543,969 2,778,348 1,697,658 1,346,141 1,112,400 48,246,521 48,246,521 64,261,046 10,437,866
64,261,046 50,687,933 43,413,858 40,107,052 32,366,723 26,711,943 22,137,724 17,785,641 12,912,039 11,880,180
Number of employees 3,067 3,744 3,649 3,645 3,360 3,015 2,617 2,217 2,087 2,299 Net profit per employee (Rs.’000) 504.739 301.988 241.950 179.628 310,577 274,540 238.286 173.560 127.935 98.279 Revenue per employee Revenue (Rs.Mn) 7.283 5.415 5.331 5.514 4.942 4.712 4.417 3.879 3.100 2.139 Employee Information Dividend per share (Rs.) 6.50 5.50 5.00 3.00 3.00 2.50 2.70 2.00 2.00 2.00 Market capitalisation Market Mn) (Rs. 17,134 9,352 5,261 4,930 3,700 3,350 1500 798 590.40 553.1 Price earnings (times) - Non Voting Voting Price earnings (times) - Non 6.60 7.42 5.17 6.84 ------Price earnings (times) - Voting Voting Price earnings (times) - 14.37 10.47 8.48 9.43 3.64 4.09 2.41 2.08 2.65 2.45 Earnings per share (Rs.) 51.95 36.41 25.96 21.21 50.78 40.93 31.18 19.24 13.38 13.58 Voting (Rs.) 746.70 381.00 220.00 200 185.00 167.50 75.00 40.00 35.5 33.25 35.5 40.00 75.00 167.50 185.00 200 220.00 381.00 746.70 (Rs.) Voting Non -Voting (Rs) 343.00 270.00 134.25 145.00 ------Net assets per share price per share Market 31st December (Rs.) 395.16 287.99 262.62 237.84 225.27 177.2 138.92 85.06 80.94 66.88 Investor Information Return on net assets (%) 14.91 13.76 12.84 10.42 23.16 23.32 22.57 22.54 19.80 20.30 Total Liabilities Total Equity and Other Liabilities 9,896,389 4,972,207 4,091,127 3,628,724 2,480,438 2,319,967 1,715,043 875,789 607,378 Unit linked Fund Unit linked 146,659 115,269 102,671 101,428 69,829 18,254 - - - - Liabilities Insurance provision - Life 38,203,473 31,868,141 26,449,967 21,300,965 16,835,054 13,897,411 11,899,647 10,044,792 Total Assets Total Other assets 4,800,431 4,406,548 4,383,642 3,041,298 2,203,246 1,328,237 976,758 874,831 644,286 643,518 property, plant and equipment property, 3,401,733 3,090,739 2,763,072 2,414,207 2,197,883 1,782,929 1,493,974 1,063,365 856, Intangible Assets Intangible 36,808 82,696 135,077 154,284 90,390 106,077 - - - - Long Term - Supplemental Term Long Assets Investments 40,007,549 29,375,634 23,361,974 19,421,328 14,893,802 13,018,389 11,143,958 8,982,385 7,782,234 7,5 Total Equity and liabilities Total Total Liabilities Total 53,368,462 42,316,014 36,453,652 33,786,880 27,821,693 23,131,842 19,340,447 16,076,026 11,556,0 Other Liabilities 8,357,798 4,107,561 3,823,923 6,154,833 4,905,160 3,740,463 3,600,272 1,656,456 1,281,493 2,88 Insurance provision - Non- Life 6,660,532 6,225,043 6,077,091 6,229,654 6,011,650 5,475,714 3,840,528 4,374,778 1, Unit Linked Fund Unit Linked 146,659 115,269 102,671 101,428 69,829 18,254 Liabilities Insurance provision - Life 38,203,473 31,868,141 26,449,967 21,300,965 16,835,054 13,897,411 11,899,647 10,044,792 Minority interest 454,717 152,070 85,680 37,713 39,670 36,129 18,928 11,957 9,885 2,927 Total capital and reserve Total Retained earnings 4,955,481 3,543,254 2,713,687 2,121,641 1,721,178 1,255,536 888,250 658,563 295,469 261,728 General reserve 1,970,416 1,970,416 1,970,416 1,970,416 1,970,416 1,470,416 1,070,416 170,416 740,000 590,000 Tsunami Relief Reserve - - - - - 550,000 - - Policyholders’ Benefit Fund Policyholders’ 37,021 37,021 37,021 37,021 37,021 37,021 38,423 38,423 50,000 - Revaluation reserve Revaluation 2,150,126 1,344,336 828,560 828,560 574,458 578,708 578,971 80,672 80,672 80,672 Share premium - - - - 2,288 2,288 - 13,680 13,680 Equity and Liabilities Stated Capital 1,324,822 1,324,822 1,324,822 1,324,822 202,288 200,000 200,000 199,584 166,320 166,320 Total Assets Total Other assets 9,923,834 10,450,178 10,507,756 9,582,762 7,975,817 6,352,847 4,256,005 4,362,391 1,885,769 1,666,9 property, plant and equipment property, 7,418,405 7,019,993 6,183,990 6,194,867 5,359,296 3,991,823 3,288,689 2,312,866 1,86 Intangible Assets Intangible 231,152 82,696 135,077 154,284 90,390 106,077 Balance Sheet (values are to the nearest rupees thousand) Group Assets Investments 2011 2010 2009 2008 2007 2006 2005 46,687,655 2003 2002 2004 33,135,066 26,587,015 24,175,139 18,941,220 16,261,196 14,593,030 11,110,384 9,158,469 8,
Ceylinco Insurance PLC 204 Annual Report 2011
57 94 4,608 287,497 133,008 ,359,672 148,555 (764,014) 2,607,342 7 3,742,105 ,202 271,737 ,861 4,967,014 99,984 842,356 66,841) (439,522) 66,841) 9,448) (4,518,672) (3,210,475) 9,252) (1,804,375) (1,656,771) 966,371) (797,362) (610,370) 1,180,471) (859,044) (641,745) (2,181,924) (1,674,325) (1,267,245) (642,101) (460,459) (290,182) (241,443) (70,561) (57,388)
Profit for the year 1,392,784 1,001,614 694,476 485,315 1,013,199 826,496 623,816 381,938 266,463 225,851 Income Tax Expenses Tax Income (163,327) (129,030) (188,401) (169,430) (30,339) - - (751) (9) 58 Profit before Taxation Taxation Profit before 1,556,111 1,130,644 882,877 654,745 1,043,538 826,496 623,816 382,689 266,472 225,793 Income from Associates Income from 191,977 70,945 26,138 11,452 2,816 12,924 7,130 (2,548) 23,736 12,920 Interest Expenses (43,451) (92,112) (93,597) (99,583) (82,078) (36,506) (47,179) (43,189) (33,466) (58,864) Operating profit before interest expenses 1,407,585 1,151,811 950,336 742,876 1,122,800 850,078 663,865 428,426 276 Operating and administrative expenses (5,380,804) (4,989,960) (4,994,844) (6,205,001) (4,784,789) (3,853,417) (3,003,620) Other revenue Other revenue 4,923,169 4,274,722 4,130,665 3,463,427 2,137,152 1,680,373 1,361,544 1,091,466 1,225,352 1,007,352 Benefit losses and expenses (15,567,458) (14,063,375) (13,360,812) (13,096,401) (10,695,940) (9,504,502) (7,893,137) (5,98 Net earned Premium 17,432,678 15,930,153 15,175,328 16,580,852 14,466,377 12,527,623 10,199,078 7,508,332 5,243,84 Revenue Revenue 22,454,587 20,272,380 19,369,887 20,098,842 16,603,530 14,207,996 11,560,622 8,599,798 6,469,199 4,749,4 Gross written premium 20,198,243 18,020,408 16,675,601 20,087,177 17,536,819 15,279,136 12,826,843 9,542,031 6,763 Total Business (Group) Total Operating profit before Interest Expenses 704,415 601,823 495,766 449,613 400,397 294,414 216,448 169,293 128,371 Operating & Administrative expenses Operating & (2,248,686) (2,217,267) (2,056,890) (2,517,582) (2,043,840) (1,635,423) (1,354,774) ( Increase in Life Insurance fund (6,335,332) (5,418,174) (4,417,313) (4,374,916) (2,933,386) (1,991,776) (1,854,855) (1,36 Commission (net of reinsurance commission) (1,226,724) (1,171,497) (1,079,487) (1,244,224) (1,036,412) (795,339) (747,423) Investment income and other Net claims and benefit 3,881,936 3,454,269 3,352,433 (2,946,295) 2,639,208 (2,685,361) 1,526,900 (2,698,277) 1,200,559 (2,113,092) (1,762,458) 972,481 (1,946,001) (1,452,636) 845,894 1,0 (1,550,546) (8 Net written premium 9,579,516 8,639,853 7,395,301 8,060,219 6,649,593 5,462,394 4,653,655 3,851,669 2,957,424 2, Life Gross written Premium 9,815,943 8,786,121 7,522,328 8,257,279 6,847,185 5,717,887 4,793,650 3,961,390 3,042,654 2 Operating profit before Interest Expenses 596,954 370,341 378,425 337,265 726,991 547,760 441,885 277,548 160,092 Operating & Administrative expenses Operating & (2,784,416) (2,498,266) (2,607,201) (3,366,099) (2,607,414) (2,157,533) (1,615,387) ( Acquisition Expenses (net of reinsurance commission) (589,532) (478,770) (511,595) (581,211) (565,862) (537,214) (497,347) Net claims (4,475,745) (4,339,864) (4,677,027) (4,766,689) (4,380,504) (4,220,634) (3,306,866) (2,173,189) (1,312,831) Investment income and other 663,740 438,080 482,853 606,068 510,173 397,912 316,062 215,988 116,105 157,0 Net earned premium 7,782,907 7,249160 7,691,395 8,445,196 7,770,598 7,065,229 5,545,423 3,656,663 2,286,423 1,45 Statement of Income (values are to the nearest rupees thousand) Non- Life Gross written Premium 10,041,212 9,224,608 2011 2010 2009 2008 2007 2006 2005 2003 2002 9,081,297 2004 11,287,233 10,350,684 9,561,249 8,033,193 5,580,641 3,721,207
Ceylinco Insurance PLC 205 Annual Report 2011 Glossary of Financial & Insurance Terms
1 Acquisition Expenses - Long Term Insurance 8 Bonus All expenses which vary with and are primarily Bonus is a method of distribution of surplus related to, the acquisition of new insurance amongst the participating policyholders of a Life contracts. Insurance Company. A bonus is an enhancement to the basic sum assured under a contract and is declared as a percentage of the sum assured. 2 Acquisition Expenses - General All expenses which vary with and are primarily related to the acquisition of new insurance contracts 9 Claims and the renewal of existing insurance contracts. The amount payable under a contract of insurance arising from occurrence of an insured event such as destruction or damage of property and related death 3 Actuary or injuries, the incurring of hospital or medicall bills, An expert concerned with the application of death or disability of the insured and gratuity claims. probability and statistical theory to problems of insurance, investment, financial management and demography. 10 Claims Incurred The aggregate of all claims paid during the accounting period together with attributable claims 4 Actuarial Valuation handling expenses, where appropriate, adjusted by A determination by an actuary at a specific date of the gross claims reserve (No.18) at the beginning the value of a life insurance Company’s assets and and end of the accounting period. its liabilities. The purpose of a valuation is to ensure that the Company holds adequate assets to fund the Company’s liabilities. 11 Claims Incurred But not Reported (IBNR) A Reserve to cover the expected cost of losses that have occurred by the Balance Sheet date but have 5 Admissible Assets not yet been reported to the insurer. Assets that are included in determining an insurer’s statutory solvency margin, specified under the rules made by the Insurance Board of Sri Lanka under the 12 Claims Outstanding - Long Term Insurance regulation of Insurance Industry Act No. 43 of 2000 The amounts provided to cover the estimated (No 50 and No. 51) ultimate cost of settling claims arising out of events which have been notified by the Balance Sheet date, being sums due to beneficiaries together with claims 6 Annuity handling expenses, less amounts already paid in A series of regular payments. Annuities include respect of those claims. annuities, where payments are made at definite times and life annuities where payments depend on the survival of an annuitant. A life Annuity is a contract 13 Commission that provides a regular payment, typically monthly, Remuneration to an intermediary for services such during the life time of the policyholder or a fixed as selling and servicing an insurer’s products.This is period if less. If the payment starts at the outset of one component of acquisition expenses.(No.1 and the contract,it is an immediate annuity. If it starts at No.2) some point in the future, it is a deferred annuity. 14 Deferred Acquisition Expenses / Deferred 7 Beneficiary Acquisition Expense Reserve The person or financial institution (for e.g. a trust Expenses which vary with and are primarily related fund) named in the policy as the recipient of to the acquisition of new insurance contracts and insurance money in the event of the policyholder’s renewal of existing contracts, which are deferred death. as they relate to a period of risk subsequent to the Balance Sheet date.
Ceylinco Insurance PLC 206 Annual Report 2011 15 Dividend Cover 24 Interim Payments Profits after tax divided by Dividend measures Periodic payments to the policyholders on a specific the number of times dividends are covered by type of policy. distributable profits for the period. 25 Life Surplus 16 Earned Premium The excess of the assets over the liabilities as Written premium (No.56) adjusted by the unearned determined by the actuary and after the distribution premium reserve (No.55) at the beginning and end of dividends to policyholders. of the accounting period. 26 Lapsed Policy 17 Earnings Per Share A policy terminated at the end of the grace period Net Profits of the Company after tax divided by the because of non - payment of premiums. Number of Ordinary shares in issue. 27 Long Term Insurance 18 Gross Claims Reserve - General Commonly referred to life insurance contracts, as The amount provided, including claims incurred but opposed to annual Non - Life insurance policies. not reported (No.11) and claims handling expenses, to cover the estimated ultimate cost, arising out of events 28 Market Capitalisation occurred by the end of the accounting period, less amounts already paid in respect of those claims. Number of shares in issue multiplied by the market value of each share as at the Balance Sheet date.
19 Gross Written Premium - Life 29 Maturity Premium to which the insurer is contractually entitled and receives in the accounting period. The time at which payment of the sum insured under a Life Insurance policy falls due at the end of its term. 20 Gross Written Premium - General Premium which an insurer is contractually entitled 30 Net Combined Ratio - General to receive from the insured in relation to contracts of insurance. This ratio indicates the profitability of the insurer’s operations by combining the net loss ratio (No. 33) with net expense ratio. 21 Insurance Insurance is a contract whereby one party the 31 Net Earned Premium insurer, in return for a consideration i.e, the premium, undertakes to pay to the other party - the Gross Written Premium adjusted for the reinsurance insured, a sum of money or its equivalent in kind, incurred and for the increase or decrease in upon the happening of a specified event that is Unearned Premium (No. 55) contrary to the interest of the insured. 32 Net Expense Ratio - General 22 Insurance Provision - General A formula used by insurance companies to relate to income to acquisition and administrative This comprises of the gross claims reserve (No.18), (e.g. commissions, taxes, staff, selling and operating unearned premium reserve (No.55) net of re- expenses). insurance and the deferred acquisition expenses Formula : Reinsurance commission 23 Insurance Provision - Long Term (net of acquisition expenses) The funds or funds to be maintained by an insurer in and expenses excluding non technical expenses respect of its Long Term insurance business in accordance with the Regulation of Insurance Industry Act. Net Earned Premium
Ceylinco Insurance PLC 207 Annual Report 2011 Glossary of Financial & Insurance Terms
33 Net Loss Ratio - Non Life 42 Reinstatement A formula used by insurers to relate net claims The restoration of a lapsed policy to full force incurred (No.36) to net earned premium (i.e. after and effect. The Company requires evidence of deducting relevant reinsurances) insurability and payment of past due premiums plus interest. Formula: Net claims incurred 43 Reinsurance Net earned Premium A method of insurance arranged by insurers to share the exposure of risks accepted. 34 Net Assets Per Share Net assets attributable to Shareholders’ equity 44 Reinsurance Commission divided by the number of Ordinary shares issued. Commission received or receivable in respect of premium paid or payable to a reinsurer. 35 Net Written Premium Gross Written Premium (No.19 and No.20) less 45 Reinsurance Premium reinsurance payable (No.42) The premium payable to the reinsurer.
36 Net Claims Incurred 46 Segment Claims incurred (No.10) less reinsurance recoveries. Constituent business units grouped in terms of nature and similarity of operations. 37 Non Life Insurance Non Life Insurance and General Insurance have the 47 Return on Shareholders’ Equity identical meaning. Profits after tax divided by the Capital employed as at Balance Sheet date. 38 Policy The printed document issued to the policyholder by the 48 Return on Total Assets Company stating the terms of the insurance contract. Profits after Tax divided by Total assets attributable to Shareholders. 39 Policy Loan 49 Revenue Reserve Under an insurance policy, the amount that can be borrowed at a specific rate of interest from the issuing An account which shows a financial summary of Company by the policyholder, who used the value of the the insurance related revenue transactions for the policy as collateral for the loan. In the event the policy- accounting period. holder dies with the debt partially or fully unpaid, the insurance company deducts the amount borrowed, plus 50 Rider any accumulated interest, from the amount payable. An amendment to an insurance policy that modifies the policy by expanding or restricting its benefits or 40 Price Earning Ratio excluding certain conditions from coverage. Market Price of a share divided by earnings per share. 51 Solvency Margin - Life The difference between the value of assets and the value 41 Premium of liabilities, required to be maintained by the insurer The payment of one of the regular periodic who carries on Long Term insurance business as defined payments that a policyholder makes to own an in the Regulation of Insurance Industry Act No.43 of insurance policy. 2000.
Ceylinco Insurance PLC 208 Annual Report 2011 52 Solvency Margin - Non Life The solvency margin is the difference between the value of the admissible assets and the value of the liabilities, required to be maintained by any insurer who carries on general insurance business. The minimum solvency margin shall not be less than the highest of the following.
(a) Rs.50 Million; or (b) A sum equivalent to 20% of Net written premium; or (c) A sum equivalent to 40 % of the average net outstanding claims for the three years immediately preceeding the current year.
53 Surplus This is the excess of assets held by the Company after deducting the actuarial liability and the provision for margin of solvency as determined by the actuary at the actuarial valuation.
54 Surrender The amounts refundable to Life policyholders when they terminate their insurance contracts after a specific period.
55 Underwriting Result This is the profit generated purely from the Non life Insurance business without taking into account the investment income and other non- technical income and expenses.
56 Unearned Premium / Unearned Premium Reserve It represents the portion of premium already entered in the accounts as due but which relates to a period of risk subsequent to the Balance Sheet date.
57 Written Premium Total premium received or due from all sources, including premiums for reinsurance assumed, during a period.
Ceylinco Insurance PLC 209 Annual Report 2011 Notes
Ceylinco Insurance PLC 210 Annual Report 2011 Ceylinco Insurance PLC 211 Annual Report 2011 Notes
Ceylinco Insurance PLC 212 Annual Report 2011 Designed & produced by Photography by Dhanush De Costa Digital Plates & printing by Gunaratne Offset Ltd