Life Insurance
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We are all about the People We create relevant solutions for the People We are the preferred brand of the People We take pride in serving the Nation and her People Finally, It’s The People ! Ceylinco Insurance PLC Annual Report 2015 Finally, It’s The People ! Through the quagmire of business and profit, lies the truth that is in the final equation, the only reality. We are all about People. We are People, we create relevant solutions for People and we succeed only if we are preferred by People. At Ceylinco Insurance PLC, this home truth is in fact the guiding philosophy. Whether in General or Life Insurance, Education, Hydro Power, Healthcare, our corporate ethos is firmly threaded by a desire to make sense to the stakeholders who are deeply bonded to our brand. Through the years, we have invested boldly in becoming the most sought after people-solution. Not because we saw this as a means for mere growth and profitability, but simply to serve the Nation and her people. Initially it was the People and…Finally, it is still the People! Ceylinco Insurance PLC Contents Corporate Information 3 Financial Highlights 4 Chairman’s Review 6 Managing Director/Chief Executive Officer’s Review 10 Director’s Review - Life Insurance 14 Board of Directors 18 Incorporating the Concept of Integrated Reporting 26 Objective of Integrated Reporting 27 Stakeholder Engagements and Relationships 28 Management Discussion and Analysis 31 The Year’s Events 53 Enterprise Risk Management (ERM) - General Insurance 64 Enterprise Risk Management (ERM) - Life Insurance 66 Reinsurance Arrangements 69 Corporate Governance 70 Board Audit Committee Report 74 Report of the Remuneration Committee 76 Report of the Investment Committee - Life Insurance 77 Report of the Investment Committee - General Insurance 80 Statement of Directors’ Responsibility 82 Financial Calendar 2016 83 Report of the Directors 86 Report of the Auditors 95 Consolidated Statement of Financial Position 96 Consolidated Income Statement 97 Consolidated Statement of Comprehensive Income 98 Statement of Changes in Equity 99 Consolidated Statement of Cash Flows 101 Insurance Revenue Account 102 Notes to the Consolidated Financial Statements 103 Quarterly Analysis 2015 172 Quarterly Analysis 2014 173 Ten Year Summary 174 Glossary of Financial & Insurance Terms 177 Notice of Meeting 180 2 Corporate Information Registered Office Consulting Actuaries Mr. U. Witharana A.C.A., M.B.A., F.C.M.A. “Ceylinco House” Life Insurance (Non-Executive Director) No. 69, Janadhipathi Mawatha, Willis Towers Watson, Gen. C.S. Weerasooriya (Retd.) Colombo 1, Sri Lanka. Towers Watson Singapore Pte. Limited, (“Independent” Non-Executive Director) No. 135, Cecil Street, Company Registration Number #09-01, Singapore 069536. Mr. S.R. Abeynayake F.C.A., M.B.A. (Sri J.), PQ 24 F.C.M.A. General Insurance (Non-Executive Director) Legal Form M/s. K. A. Pandit Mr. S.H.J. Weerasuriya B.Sc. (Lond.), M.I.C.E., A Quoted Public Company with limited Consultants & Actuaries, F.I.E. (S.L.), F.S.S.E. (S.L.), C. Eng. liability, incorporated in Sri Lanka in 1987. 2nd. Floor - “Churchgate House”, Veer Nariman Road, (Non Executive Director) Licensed as a Company authorized to carry Fort, Mumbai - 400 001, India. - appointed with effect from 17th. February, 2015. on insurance business, under the Control of Insurance Act No. 25 of 1962 as amended Board of Directors Company Secretary by Act No. 42 of 1986 (Presently replaced Mr. J.G.P. Perera Pg. Dip. M.CIM. (U.K.), Mrs. T.N. Jasenth uliyana F.C.I.S. (U.K.), by Regulation of Insurance Industry Act F.C.I.M. (U.K.) F.C.P.M., F.C.C.S. No. 43 of 2000) upto 31st. May, 2015. - Chairman (“Independent” Non - Executive Director) Bankers Main Place of Business Bank of Ceylon Life Insurance Mr. A.R. Gunawardena F.C.I.C. Commercial Bank of Ceylon PLC “Ceylinco Life Tower”, - Managing Director / Chief Executive Officer Deutsche Bank AG (Custodian Bank) No. 106, Havelock Road, (Executive Director) DFCC Vardhana Bank Colombo 5, Sri Lanka. Mr. R. Renganathan F.C.A., F.C.M.A. Hatton National Bank PLC Telephone : 2461000 (Non-Executive Director) Hongkong & Shanghai Banking Call Centre : 2461461 (Hotline) Corporation Ltd. Fax : 2555959 Mr. H.D.K.P. Alwis F.C.I.C. National Savings Bank E-mail : [email protected] (Non-Executive Director) Nations Trust Bank PLC Website : www.ceylincolife.com Mr. E.T.L. Ranasinghe M.B.A., Dip.M., NDB Bank PLC F.C.I.M. (U.K.), Chartered Marketer Pan Asia Banking Corporation PLC Main Place of Business (Executive Director) People’s Bank General Insurance Sampath Bank PLC “Ceylinco House”, Dr. W.C.J. Alwis B.Sc., F.I.I.I., F.C.I.I. (Lond.), Seylan Bank PLC No. 69, Janadhipathi Mawatha, F.I.o.D. (U.K.) Standard Chartered Bank Colombo 1, Sri Lanka. (Non-Executive Director) Union Bank of Colombo Limited Telephone : 2485757-9 Mr. P.D.M. Cooray LUTCF (U.S.A.), C.I.A.M., Call Centre : 2393939 C.I.I. (AWARD) Fax : 2485701 (Executive Director) E-mail : [email protected] Website : www.ceylinco-insurance.com Mr. K.I. Dharmawardena Attorney-at- Law (“Independent” Non - Executive Director) The Stock Exchange Listing Mr. D.H.J. Gunawardena F.C.M.A. (U.K.) The Ordinary Shares (Voting and Non (“Independent” Non - Executive Director) Voting) of the Company are listed with the Colombo Stock Exchange of Sri Lanka. Mr. P.A. Jayawardena F.C.A., F.C.M.A., F.M.A.A.T. (S.L.) Principal Activities (Non-Executive Director) Management of Investment, Insurance Mr. N.D. Nugawela F.C.I.C. Operations, Health Care Operations, (Non-Executive Director) Education and Power Generation. Mr. T.N.M. Peiris B.A. (Econ.) (Hons.), Auditors F.C.A., F.C.M.A., F.C.I.C. Ernst & Young, - Director (Finance) / Head of Finance Chartered Accountants, (Executive Director) No. 201, De Saram Place, Colombo 10. 3 Ceylinco Insurance PLC | Annual Report 2015 Financial Highlights Group 2015 2014 Change Rs.’000 Rs.’000 % Results for the Year Gross Written Premium 27,984,159 25,222,854 11 Net Earned Premiums 23,486,332 21,301,922 10.25 Investments and Other Income 8,324,133 8,450,855 (1.50) Revenue from subsidiaries 2,860,228 2,511,173 13.90 Net income 34,670,693 32,263,950 7.46 Benefits/ claims /operation admin & other expenses (30,847,944) (28,446,588) 8.44 Profit Before Share of Associates 3,822,749 3,817,362 0.14 Share of profit of associates 275,724 150,917 82.70 Profit Before Taxation 4,098,473 3,968,279 3.28 Profit After Taxation 3,650,216 2,849,677 28.09 Position at the Year End Shareholders’ Funds 22,212,630 20,083,610 10.60 Life Insurance Contract Liability 67,157,184 60,021,879 11.89 Non - Life Insurance Contract Liabilities 9,576,722 9,259,497 3.43 Investments 78,749,957 66,832,062 17.83 Total Assets 108,165,034 96,080,187 12.58 Market Capitalisation (Rs. Mn) 33,334 31,103 7.17 Group 2015 2014 Rs. Rs. Per Ordinary Share Earnings (Basic) 132.3 96.5 Dividends - Proposed 22.5 20.0 Net Assets ( Shareholders’ Equity) 840.9 760.3 Market Value at the Year End - Voting 1,410.1 1,378.8 Market Value at the Year End - Non Voting 800.0 550.0 Ratios Return on Equity % 15.8 12.7 Dividend Cover (Times) 5.9 4.8 Price Earning (Times) - Voting 10.7 14.3 Price Earning (Times) -Non Voting 6.0 5.7 Rs. Mn. Rs. Mn. Rs. Mn. Rs. Mn. 30,000 5,000 15,000 15,000 25,000 4,000 12,000 12,000 20,000 3,000 9,000 9,000 15,000 2,000 6,000 6,000 10,000 5,000 1,000 3,000 3,000 0 0 0 0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Premium Income Premium Income Premium Income Life & Non Life Profit before Taxtion Non Life Life 4 Non - Life Insurance Life Insurance 2015 2014 Change 2015 2014 Change Rs.’000 Rs.’000 % Rs.’000 Rs.’000 % Results for the Year Gross Written Premium 13,557,833 12,164,864 11.45 13,456,827 12,002,524 12.12 Net Claims / Net Benefits (5,690,518) (5,259,911) 8.19 (5,956,744) (4,893,847) 21.7 Increase in Life Insurance Contract Liability - - - (7,135,304) (7,256,468) (1.67) Investments and Other Income 1,990,706 1,520,514 30.92 6,744,278 6,826,012 (1.25) (including reinsurance commission) Profit Before Taxation * 1,090,155 867,413 25.68 2,166,684 2,298,086 (5.72) Profit After Taxation * 896,860 779,637 15.04 2,045,721 1,362,987 50.09 Solvency Margin Non - Life Insurance Life Insurance 2015 2014 2015 2014 Rs.Mn Rs.Mn Rs.Mn Rs.Mn Available Solvency Margin 2,789 2,843 19,509 21,163 Required Solvency Margin 2,114 1,958 2,365 2,016 Solvency Ratio (Times) 1.32 1.45 8.25 10.50 * The profit of Non-Life Insurance (2015) is shown excluding available for sale reserve realisation due to segregation. Rs. 3.65 Bn Profit After Tax Rs. 22.2 Bn Shareholders’ Funds 5 Ceylinco Insurance PLC | Annual Report 2015 Chairman’s Review Winds of Change “I can’t changec the ddirectionirection of the windwind,, bbutu I can aadjustdjust mmy sails to aalwayslways rreach my ddestination.”estinati JimmyJimmy Dean ((USUS entrepreneurentrepreneur and popular TV personality) 6 As I begin to write this review I am aware that this is a very special full blown sails that in 1961 the first winds of change of cyclonic Annual Report.