Dividend from HASU

HNB ASSURANCE PLC
Company ID: - HASU
Date of Announcement: - 30.Jan.2012
Rate of Dividend: - Rs. 2.10 per share / Final Dividend
Financial Year: - 2011
AGM: - 29.Mar.2012
XD: - 30.Mar.2012
Payment: - 10.Apr.2012
Share Transfer Book Open

GWP up 24%, profit after tax up 14%
HNB Assurance PLC has completed its 10th year in business with a superior performance posting 24% growth in gross written premium (GWP), 14% in profit after-tax and a 10% life surplus, the company said in its just released annual report.

The life insurance GWP was up 19% to Rs.1.29 billion while the general insurance GWP grew 27% to Rs.1.7 billion giving a combined GWP growth of 24% to Rs.3 billion.

The profit after-tax of Rs.275 million translated to earnings per share of Rs.5.74, up 7% from Rs.5.38 a year earlier and the company will propose a dividend per share of Rs.2.10 against Rs.1.80 the previous year.

The company’s Acting Chairman, Mr. Rajendra Theagarajah, said that HNB Assurance had reached another significant milestone by crossing the Rs.3 billion mark in annual turnover "in only its tenth year of operation."

He said that the profit after-tax was healthy despite having to contend with an adverse investment climate which saw a decline in investment income.

The lag had been made up by significant improvement in underwriting results from the general insurance business, Theagarajah said.

He reported that the company had taken early steps to conform to the proposed minimum requirements by increasing its stated capital more than three-fold from Rs.375 million to Rs.1.17 billion during the year by capitalizing reserves in the proportion of one for six followed a one for seven rights issue.

"The rights issue was fully subscribed demonstrating the confidence of the shareholders in the company’s future prospects," he said.

Managing Director Manjula de Silva said that it was noteworthy that both the general and life business had achieved growth rates significantly higher than those achieved over the previous two years. This indicated a significant acceleration in the companybusiness growth.

Motor and miscellaneous classes led the way in the performance of the company’s general business with motor contributing the most in absolute terms with GWP up by Rs.272.4 million. The miscellaneous class had achieved the highest growth rate of 58% he said.

"A significant expansion in the volume of business generated coupled with a rate increase contributed to the growth in motor GWP while premium increases on medical policies accounted for much of the growth experienced by the miscellaneous classes. Fire and marine classes registered moderate rates of growth," de Silva reported.

Almost all classes of the life business had contributed to the achievement of the segment and the company having allocated Rs.104.6 million to policy holders for distribution of a bonus also made provision of Rs.135.2 million as provision for solvency margins and Rs.149.7 million as provision for future bonus and contingencies.

The company had also been able to declare a one-off loyalty bonus of 50% of the annual bonus to its policy holders in view of its 10th anniversary.

However, the MD said that after many years of steady and impressive growth the company’s investment income had declined 8% exerting pressure on overall profitability. Investment income on the life fund was down 7% and on the shareholders fund by 11%.

"This was mainly a result of provisions made in respect of equity investments which amounted to Rs.17.02 million in life and Rs.18.52 million in shareholders fund. The company’s fund management team succeeded in achieving a satisfactory growth in investment income on fixed income instruments of 3.1% and 2.5% on life and shareholders’ funds respectively, but the unrealized losses arising from the decline in the stock market resulted in the overall growth turning negative," he explained.

HNB with 59.9% of the equity of HNB Assurance is the controlling shareholder followed by the Mercantile Merchant Bank with 6.13% in one account and 2.31% on a second account. Ceylon Guardian Investments Trust owns 4%.

The company had a stated capital of Rs.1.17 billion, up from Rs.375 million the previous year.

The directors of the company are: Messrs. R. Theagarajah (Acting Chairman), Manjula de Silva (MD), M.U. de Silva, J.M.J. Perera, J.D. Kekulawala, Pratapkumar de Silva, D. Manik de Silva Wijeyeratne, Sarath Ratwatte and Ms. Shiromi Halloluwa (Board Secretary).
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