Ceylinco Insurance advocates fair game
Mr. Ajith Gunawardena
Ceylinco Insurance will entertain any insurance as long as it is at the right premium, top officials say.
“We are like Henry Ford who said that he will provide any vehicle as long as it is black. In the same sentiment as long as it is at the right premium and the right market price we will provide insurance,” Ajith Gunawardena, CEO/Managing Director Ceylinco Insurance PLC told the Business Times in an interview earlier this week.
He was critical of the competition saying it was not in the ‘ real competitive ‘ terms. “It is clearly visible in the risks that they are (other insurance firms) carrying.” Mr. Gunawardena noted that some firms don’t charge adequate premiums to represent the risks they carry.
Insurance analysts agree. They noted that there can be a parallel between the failure of finance companies who provided high interest rates to their customers in the recent past with insurance companies who don’t charge proper premiums. “Insurance companies can go bust if they charge lower premiums for high risks,” an industry analyst noted to the Business Times. He said this would result in having lower profits or ‘no’ profits.
Ceylinco Group net earned premiums in the 1Q19 grew by 6.9 per cent year on year (YoY) while revenues from non-insurance segments grew by 8.2 per cent YoY during the period. The group saw a large increase in taxes (+119.2 per cent) during the same period.
The large increase in taxes saw the group tax burden increasing to 24.3 per cent vs 7.6 per cent in 1Q18). Mr. Gunawardena noted that there is no point complaining about the taxes. “If you can’t make profits get out of the business. There is no point complaining about the various policies that the Government implements,” he said.
While there are many inquiries on Terrorism Insurance cover (TC) and also many firms opting for this after the chaotic Easter Sunday attacks in April, the company has seen a 25 per cent growth in TC. Mr. Gunawardena noted that under TC, a business can be insured up to Rs.2 billion locally. “But big businesses are worth more than that and also we in turn have to take overseas cover (reinsurance) for providing TC. As such the increase in TC will not make a major impact on the bottom line.”
Ceylinco Insurance has Mitsui Sumitomo as a 15 per cent stakeholder. Mr. Gunawardena added that there are many firms that request for sizable percentages, but Ceylinco won’t sell any more stakes.
He said that Ceylinco will carry on product expansion overseas as it is more feasible. “We are enjoying joint ventures with many foreign companies in overseas markets. It is better to join with them and do our product expansion than setting up shop abroad.”