HNB Assurance 3Q propelled by life and non-life premium incomes
The continued growth in life insurance premiums supported by the pandemic-induced urgency for life protection covers and the pickup in nonlife insurance premiums helped HNB Assurance PLC to deliver strong top and bottom line performances in the September quarter, the interim results showed.
The company reported gross written premiums (GWPS) of Rs.3.26 billion in the three months to September, the company’s fiscal third quarter, recording a 10 percent growth from the same period last year.
The life insurance business contributed Rs.1.86 billion to consolidated premiums of the group, which has a fully-owned general insurance company - HNB General Insurance Limited - logging nearly 13 percent growth over the comparable period last year.
Meanwhile, HNB General Insurance generated premiums of Rs.1.39 billion for the quarter, up 5.3 percent from a year ago levels, as motor insurance turned to a nominal growth after recording a contraction in the June quarter.
All other sub-sectors such as fire, marine and miscellaneous categories recorded growths in a potential sign of bettering prospects for the industry, which suffered a prolong set back since the pandemic struck last year.
However, the pandemic added a tailwind to the consolidated industry to emerge stronger as life insurance picked up growth as more individuals drew into the sector seeking life, healthcare and retirement protection while the non-life delivered some robust profits in 2020 due to less incidence for claims although the premiums declined due to the broadbased mobility restrictions, which came with the virus.
Although not directly comparable, the life insurance industry GWPS rose by a robust 29.8 percent to Rs.56.2 billion in the first six months of this year while the non-life premiums slipped 5.3 percent to Rs.49.2 billion led by the weak motor insurance premiums, the data from the insurance sector regulatory showed.
If HNB Assurance’s motor insurance growth in the September quarter was any indication for the entire industry or if it provides a signal for its future trajectory is too soon to be determined due to the limited data and the uncertainly over how the pandemic evolves.
However, in a recent note Fitch Ratings said it does not expect “a material recovery in motor insurance policy volumes” and therefore, “most insurers are likely to continue to seek opportunities to diversify their products into non-motor insurance lines”.
Both Fitch Ratings and the government said they do not expect an immediate relaxation of the ban, which is in place for nearly two years on the vehicle imports, as the country’s foreign exchange crunch still runs deep.
Meanwhile, HNB Assurance reported earnings of Rs.180.1 million or Rs.1.20 a share for the July-september quarter, compared to the earnings of Rs.116.5 million or 78 cents a share in the same period last year.
For the nine months to September, the company reported earnings of Rs.465.1 million or Rs.3.10 a share, compared to Rs.616.4 million or Rs.4.11 a share last year.
The incumbent period profits however does not contain the surplus transfers from the life fund, which will be determined only at the financial year end.
Meanwhile, the nine-month claims and benefits paid to the policyholders rose by 12 percent to Rs.2.94 billion.
“The group continued its growth momentum despite the ongoing impact of COVID-19, recording a 20 percent GWP growth during the period, whilst our ongoing cost mitigation efforts and other effective business strategies in place helped foster the group bottom line,” said Chief Executive Officer Prasantha Fernando in a statement to the press in reference to the nine-month performance.
Hatton National Bank PLC has a 59.99 percent stake in HNB Assurance.