HNB ASSURANCE [HASU.N] INTERIM RESULTS 02 SEPTEMBER 2015

HNB Assurance (HASU), the fastest growing insurance company in the country, is a subsidiary of one of the leading banks Hatton National Bank (HNB.N; LKR225.0 and HNB.X; LKR176.5) and commands a market share of 3.3% and 4.9% in General and Life Insurance industry.

Net earnings grew by 18.2% YoY to LKR64.0 mn in 2Q2015 driven by the growth in Gross Written Premium (GWP). Meanwhile net profit for the 1H2015 dipped by 26.4% YoY to LKR79.5 mn cf. LKR108.0 mn in 1H2014.

GWP saw a growth of 19.4% YoY to LKR1.3 bn in 2Q2015 cf. LKR1.1 bn in 2Q2014 with Non-Life and Life contributing equally to premium income. Non-Life grew by 22.9% YoY to LKR668.1 mn in 2Q2015 whilst Life insurance witnessed a growth of 16.1% YoY to LKR657.0 mn in 2Q2015. Meanwhile GWP for the 1H2015 grew by c.19% YoY to LKR2.7 bn cf. LKR2.2 bn in 1H2014.

Net benefits, claims and expenses up 22.9% YoY to LKR1.4 bn in 2Q2015 cf. LKR1.1 bn in 2Q2014 on the back of increased claims (+35.1% YoY) and operating expenditure (+24.8% YoY). Meanwhile underwriting and net acquisition costs also escalated by 26.5% YoY to LKR196.2 mn in 2Q2015 while life fund contract liabilities also grew by 21.5% YoY to LKR450.6 mn. Further, net benefits, claims and expenses for the 1H2015 increased by c.19% YoY to LKR2.7 bn cf. LKR2.3 bn in 1H2014.

The claim and expense ratio stood at c.35% and c.47% respectively in 2Q2015 against 37.6% on the back of growth in motor claims and 47.4% in 2Q2014.

Investment income up c.7% YoY to LKR325.1 mn in 2Q2015 from LKR304.1 mn in 2Q2014. In addition revenue from interest and dividends for 2Q2015 were also up c.8% YoY to LKR225.1 mn together with fee and commission income that grew by c.21% YoY to LKR82.6 mn.

HASU’s investment base grew 20.6% YoY to LKR8.8 bn in 2Q2015 cf. LKR7.3 bn in 2Q2014 while it increased by 4.7% QoQ from LKR8.3 bn in 1Q2015. Loans and receivables contributed c.68% (LKR6.0 bn) to the investment fund for the period under review. Meanwhile, financial assets available for sale and held to maturity recorded a contribution of c.20% and c.7% at LKR1.7 bn and LKR621.8 mn respectively to the investment base in 2Q2015.