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Union Assurance PLC Recorded Encouraging performance in 2018

Union Assurance PLC (UA) recorded an encouraging 11% growth in Gross Written Premiums (GWP) in a challenging operating environment.Profit after tax in 2018 was Rs. 3.2 billion against Rs. 7.3 billion recorded in 2017. The Rs. 7.3 billion profit after tax in 2017 includes the one-off surplus transfer of Rs. 3.4 billion. For the year 2018, surplus transfer from the Life fund amounted to Rs. 1.1 billion. Rs. 882 million was generated from the shareholder investment portfolio and Rs. 150 million was accounted as UA’s share of profits from the general insurance business from Fairfirst Insurance Limited.

Total other revenue recorded a 1% degrowth. This is mainly due to increase in unrealised losses stemming from equities. The investment environment was impacted by various external and internal pressures in 2018. These factors caused volatility in equity and fixed income asset classes.

Net insurance benefits and claims paid increased by 9% mainly due to increase in maturity and surrender payouts. Maturitypayouts are in line with UA’S contractual obligations and surrender payments increased due to the challenging economicenvironment. Underwriting and net acquisition cost increased by 12% to Rs. 2.1 billion due to increase in GWP and changes in incentive structure. Other operating, administrative and selling expenses increased by 41% as we invested in strengthening the brand and distribution channels.

With the implementation of the surplus based income tax in accordance with the New Inland Revenue bill, the Company recognised a deferred tax asset amounting to Rs. 1.6 billion and notional tax credit amounting to Rs. 541 million. The deferred tax asset and notional tax credits will be utilised against future income tax liabilities.

As a result of the above life fund increased by 14% to Rs. 30.6 billion by year end and maintains a healthy capital adequacy ratio indicates the financial strength of the business.

During the year,UA strengthened distributionand operational capabilities.Several initiatives were undertaken to transformAgency channel. In the bancassurance channel, we migrated our distribution agreements with Nations Trust Bank and Union Bank from an open architecture model to strategic, exclusive partnerships. These partnerships enable us to synergise the capabilities of both organizations to provide unique product and service solutions to untapped market segments.

UA invested Rs. 800 million to upgrade thecore IT system which went live in August2018. The new platform improves the efficacyof new product development, underwriting,policy administration, claims serving, billing,collection, payments and regulatory reporting.

UA continues to garner national and regional recognition for many facets of its business. As a result of strong top andbottom-line track record, UA was listed in the Forbes Asia ‘Best Under A Billion’ list in August 2018. UA became the only Sri Lankan company to be part of this prestigious list comprised of 200 public companies in the Asia Pacific region. UA also become the only Life Insurance Company in Sri Lanka to be recognized as the ‘Most Trusted Life Insurance Company in Asia’ at Asia’s Most Trusted Brand Awards 2018.

UA was adjudged joint winners in the Finance and Insurance sector for 10th consecutive year at the sustainability awardsconducted by the Association of CharteredCertified Accountants (ACCA). The company’s reporting practices were also recognisedby the Institute of Chartered Accountantsof Sri Lanka, with the 2017 annual reportreceiving a silver award in the insurancecategory and a gold award for corporatesocial responsibility reporting.In addition, for the demonstrated excellence in business practices, UA secureda Gold Award for Excellence in Corporate Governance, 2nd Runner-up in the Extra-Large Category and was placed Joint winners in the Insurance Category at the National Business Excellence Awards 2018.

The company was recognised as a “Great Place toWork” for the 6th consecutive year by the GreatPlace to Work Institutehighlighting UA awork place that is conducive to growth andpersonal development.

UA has a strong brand, reputation forgood governance, a professional team andperformance driven culture. These aspectscombined with our financial strength andcustomer focus, position UA to deliversustainable value to all stakeholders in theyears to come.