Janashakthi Insurance Premium income Rs. 7.13 b

Janashakthi Insurance PLC, posted a total income of Rs.7.27 b, while total Gross Written Premium income rose 16.0 percent to Rs.7.13 b for the year- ending December 31, 2011. Non-life insurance business rose 18.0 percent to Rs.5.256 b during the period under review. Operating amidst challenging economic and market conditions, Janashakthi posted a healthy Rs.636 m in post-tax profits, largely driven by growth in the Non Life segment.

“I see this as a very positive trend amidst the challenges of an excessively competitive industry,” said Chairman W.T. Ellawala .

Prakash Schaffter

In the coming months, Sri Lankan insurance market faces challenging times as high interest rates and a credit squeeze that could slow economic growth. Sri Lanka's insurance penetration continues to remain just under 11.0 percent for 20 million people.

“The challenge before us it to innovate insurance products, especially in the areas of pension and health insurance that caters to the growing aging population,” said Ellawela.

He also drew attention to the need to manage a growing number of claims that is challenging the way Sri Lankan insurers do business. Road accidents remain the biggest source of insurance claims, which has been compounded by a growth in new motor registrations.

Profitability came under pressure during the year under review, due to falling interest rates and sluggish returns from quoted equity portfolio.

Capital Gains from Equities was Rs 109 Mn, down from a high of Rs 290 m generated in the prior year, due to reduced market prices and revised year end valuations on a mark to market basis. This is due to adverse market movement during the year.

Janashakthi’s investment portfolio increased by 20.0 percent to Rs.8.054 b The exposure to government securities was at 41% . This is a reduction from a high of 59 percent in the previous year, due to the acquisition of higher yielding Corporate Bonds and Bank Investments.

Managing Director Prakash Schaffter said the management team focused on writing business at a profit, as opposed to focusing on top line growth.

“We have refrained from quoting rates that are uneconomical and do not add to our bottom line. This has resulted in some degree of trade off between a lower top line and a higher bottom line, in keeping with our focused strategy of bottom line growth,” Schaffter said.

Going forward, Janashakthi plans to extend its reach deeper into the north and east, taking advantage of the vast post-war development activities that is flouring in the region. Janashakthi has been in the area since 2002, and currently have 12 branches servicing the local communities.

“We hope to add Mullaittivu and some other locations to our branch network to kick off operations in towns, as the regions economy prospers,” . Schaffter said.

Janashakthi's flagship product, the motor segment, continued to drive company profitability.

Motor Gross Written Premium notched a 13.0 percent growth of Rs. 3.838 b over Rs. 3.397 b written in 2010. The sector benefited largely from a Government policy directive to ease imports and custom duties that created a demand for reconditioned and new vehicles.