Financial Times

Ceylinco Insurance Rs 2.2 billion ahead of SLIC
The claim over which company is the leader in the insurance business has taken a new turn. Ceylinco Insurance Co Ltd said last week it retained its market leader position in the country’s insurance sector in 2005, with a consolidated premium income of Rs 12.8 billion and a market share of more than 32 percent in both life and general insurance segments.

It said it was Rs 2.2 billion (life and general turnover) ahead of the “nearest competition” Sri Lanka Insurance Co. (SLIC). “Premiums are a benchmark in determining market leadership the world over,” Ajith Gunawardena, Executive Director, Ceylinco Insurance Co. Ltd told The Sunday Times FT on the sidelines of a press conference.

“Assets and liabilities are stated in the balance sheet and they are not criteria for leadership,” he elaborated, saying the general division of the company recorded a premium income of Rs 8 billion with a growth of 45 percent over the previous year.

“The market share of the general division is well over 37 percent and almost seven percent higher than the nearest competitor.” Ceylinco Insurance has recorded a net profit of Rs 611 million during the last year, which is the highest profit recorded by an insurance company. This result was achieved after writing off a considerable amount against compensation paid for policy holders, affected by the tsunami who did not have the adequate cover.
The company’s Life Fund recorded a growth of 19 percent to total Rs.12 billion as at December 31, 2005, demonstrating prudent financial management in a period of volatility in the investment markets.

According to research analysts the insurance penetration in Sri Lanka is low. In 2001, only 5.3 percent of the population had a life insurance policy and 7.3 percent a non-life policy.

This compares with insurance penetration of 10 percent in India where per capita GDP is lower. Spending on life products comprised 0.64 percent of Sri Lankan GDP in 2003 and spending on non-life products at 0.82 percent. There are currently 14 insurance companies and 45 brokers in the Sri Lankan market. More significantly, Aviva purchased a majority stake in Eagle Insurance, which is Sri Lanka’s third-largest insurer, in February 2006.

Life Insurance Corporation of India and American International Group had also entered the market via joint ventures with local companies. Although foreign investments in this sector are encouraged, such participation is expected to remain limited due to political and economic uncertainty and because of the relatively small size of the Sri Lankan market.

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