H2 FY 2018 Earnings Update March 2019 Company Overview Janashakthi - - PowerPoint PPT Presentation

H2 FY 2018 Earnings Update

March 2019

Company Overview

Janashakthi Insurance PLC: continuing to forge ahead with a singular focus on Life Insurance business

20.2

Total Assets (LKR Bn)

4%

Market Share*

*Based on IRCSL industry performance Q3 – 2018

A key driver in formulating Sri Lanka’s insurance industry blueprint Strong foundation and family values inculcated by Mr. Chandra Schaffter, renowned as the “Father of Insurance” in Sri Lanka, has allowed the Company to continuously differentiate and set the industry benchmark for customer services. A standalone Life Insurance Company With the divestment of its general insurance arm, the Company has returned to its roots as a standalone Life Insurance Company, relaunching Janashakthi brand as “Janashakthi Life”. Driven by the purpose to uplift lives of all stakeholders Committed to become the leader in the Life Insurance industry, by staying true to Company’s purpose

• f “Uplifting Lives & Empowering your dreams”.

A robust and a future-ready entity The company is being repositioned as a sales centric organization with the focus on digitization and a much improved branch outlook that reflects the “Unwavering Strength”.

A brand name synonymous with protection, security and continuity with a history of 25 years

1994 1995 1997 2000 2001 2005 2006 2015

Commenced

• perations as

Sri Lanka’s first specialized life insurer Commenced non-life insurance operation Janashakthi Life announces their first bonus to policy holders Life and non-life businesses merge to form an unified

• rganization

Acquires National Insurance Corporation and becomes the first and only insurer to acquire a state insurer Becomes the third largest insurer in terms of the

• verall GWP

Segregates life and non-life insurance businesses to comply with regulations Janashakthi Life brand winning the first ever Gold Effie awarded to the services industry and the insurance sector

2017

Divests Janashakthi General Insurance Limited to Allianz SE

2018

Winning the Gold awards for National Business Excellence Award

• verall and in insurance category

Acquires AIA’s non-life insurance business Crowned No.1 service brand of the year - SLIM

Insurance Industry Overview

Industry snapshot

GDP 2017 – LKR 13,289 Bn Insurance / GDP – 1.24% Life Ins. / GDP – 0.54%

35.5% 14.3%

• vs. Labour

force vs. Population

Life Insurance Penetration

Insurance Industry : LKR 164.6Bn1

15

Life Insurers

14

General Insurers

43.4% 56.6% Life General

1Sum insured

*2017 statistics

Performance Update

Our key performance highlights

Capital to Assets Ratio** 45% Return on Equity 20%

*Profit from continuing operations **Capital to Assets=Shareholders’ Funds/Total Assets

Gross Written Premium LKR 3,009 Mn

+4%

Total Net Income LKR 4,601 Mn +12% Profit After Tax* LKR 1,874 Mn

+10%

Gross Written Premium and Net Income

2,944 2,903 3,009 4,216 4,104 4,601 2016 2017 2018

Gross Written Premium Net Income

1,538 1,563 2,117 2,411 H2FY17 H2FY18

LKR Mn The core focus of the Company in FY2018 was not to grow the business but to stabilize the business

• perations and set the foundation for

the Company to operate as a pure Life Insurance Company However, against the backdrop of this restructuring process, the Company expanded the GWP by c.4% in FY2018 compared to the previous year During the year, the Company introduced a specialized team to secure more corporate clients which would drive GWP going forward Total net income recorded a growth

• f c.12% YoY in FY2018 mainly due to

the increase in investment income by c.13% to LKR 1,503 Mn

New business premium and customer retention

1,288 1,163 1,253 2016 2017 2018

New Business Premium

536 592 H2FY17 H2FY18

LKR Mn

74% 71% 71% 71% 72%

Persistency (13th Month) The Company has sustained a persistency ratio of c.71% throughout the last couple of years through strong customer service ethos ensuring improved

• verall customer satisfaction

Customer retention improved in the second half of FY2018 due to new digital initiatives adopted by the Company FY2018 saw a significant increase in New business premium which grew by c.8% YoY in FY2018 New business premium in the second half of FY2018 recorded a growth of c.10% YoY due to the sales centric approach adopted by the company

Profitability

953 1,692 1,874 2016 2017 2018

Profit After Tax

LKR Mn

12% 18% 20%

ROE The profit after tax includes one off surplus transfer of LKR 1,796 in FY2017 Mn

The profit after tax in FY2018 includes a deferred tax reversal of LKR 1,322 Mn In FY2018, the profit of the Company got impacted by the significant rise in net claims and the administrative expenses by c.35% and c.84% respectively The administrative expenses includes LKR 313 Mn one off expense directly attributable to the divestment of the General business and other one off expenses

14% 9% 11% 31% 27% 14% 10% 18% 13% 5% 4% 15% 34% 35% 26% 6% 6% 9% 11% 2016 2017 2018

Investment Property Unit Trust Corporate Debts Investment in Equity Securities Reverse Repurchase Agreements Investment in Government Securities Placements with Banks & Financial Institutions

LKR 12,398 Mn LKR 17,655 Mn LKR 11,138 Mn

Investment portfolio and yield

• Investment portfolio grew by c.27% YoY in FY2018 predominantly due to the increase in investments in equity securities by c.387%. This was due to the

transfer of assets held by the General Insurance business to the Company due to the divestment. Similarly, investment property also increased to LKR 1,998 Mn in FY2018 as a result of the divestment

• During FY2018, the Company has reduced investments in government securities to invest further in unit trusts and corporate bonds to improve return.

However, the investment yield has come down due to the low yields of equity shares. Investment yield excluding the investments in equity shares was 12.71% in FY2018

Investment Portfolio including investment property

7% 37% 1% 14% 27% 14%

Rental Income Unit Trust Corporate Debts Equity Securities* Reverse Repurchase Agreements Government Securities** Placements with Banks & Financial Institutions

6% 7% 38% 1% 22% 15% 11%

FY2017 FY2018

Investment Yield1 and income composition

10.52% 11.00%

Total Income

LKR 1,292 Mn

Total Income

LKR 1,585 Mn

*Income from Investment in Equity Securities = Dividend Income + Marked to Market gain / (loss) on Shares + Profit on Sale of Shares **Income from Investment in Government Securities includes Profit on disposal of Government Securities also

Claims settlement days

20 21 7 18 35 17 20 12 9 11 8 7 2016 2017 2018

Basic Accident Critical Hospitalisation

Average claims settlement days The Company has significantly improved the service delivery during FY2018 through the digital infrastructure As a result, the average claims settlement days have

decreased significantly during the year signifying the Company’s commitment towards improving customer service which is in line with the Company’s purpose

Product mix: shift towards universal life insurance products in line with market demand

Launching of the New Health Rider with the Cashless Facility Launching of the Group Cashless Health Cover Development of an array of insurance products to the Partnership Channel on B2B platform coupling wellness benefits Development of a digital product to be sold through digital channels coupling wellness features Product mix based on first year premium 2016 2017 2018 H2FY17 H2FY18 Endowment 34% 28% 19% 25% 17% Universal Life/Investments 18% 27% 43% 28% 46% Single 38% 33% 27% 36% 24% Group 10% 11% 11% 11% 13%

428 339 234 227 330 539 484 400 340 125 138 140 2016 2017 2018 Endowment Universal Single Group

LKR Mn

154 114 177 304 228 157 69 87 2H2017 2H2018 1,263 1,207 1,253 662 628

Ratio analysis

Operational ratios 2016 2017 2018 H2FY17 H2FY18 Expense ratio 22% 24% 49% 25% 44% Net acquisition cost ratio 24% 24% 31% 23% 30% 2016 2017 2018 Investment income as a % of GWP 36% 46% 50% Investment income as a % of Financial Investments* 9% 11% 11% 2016 2017 2018 Capital adequacy ratio** 267% 241% 332% Capital to total assets 43% 47% 45%

*Investment income/Average financial investments **CAR=Total Asset to Capital/Risk Coverage Ratio

The expense ratio and the commission ratio of the Company has increased due to the sales centric approach adopted by the Company Excluding the one-off nature expenses the expense ratio is c.33% for FY2018 and c.32% for the second half of FY2018 The main reason for the increase in capital adequacy ratio in FY2018 was the disposal of the General business as the investment in JGIL was considered as an inadmissible asset

Key Focus Area of FY2018

Realigning strategy to fuel growth with the recent divestment

2018

A year of transformation

Roll out of

• rganizational Strategic

Plan The transformation towards being a purpose-driven entity to create an engaged and inspired workforce - “Uplifting Lives &

Empowering your dreams”

The unveiling of “Janashakthi Life” a new- look brand identity, supported by a 360 degree communications campaign Re establishing a new branch network specifically designed to enable the Janashakthi Life sales staff to offer state-

• f-the-art Insurance

solutions to its customers Consolidating the strength of the Janashakthi Life team into

• ne central location, with the

new Life Headquarters in Colombo 02 housing the entire head office team Forging towards digital innovation by enabling the sales force by launching the Advisor Virtual Office (AVO) system Restructuring the sales model into a performance- based model to drive quality

• f sales

Developing new business

• pportunities through

partnership development by establishing a new channel, an area that is expected to fuel sales growth for the future

Q&A