Wealth Insights Series: Insurance – Insurance Sector Opportunities

Asia Securities, Sri Lanka’s leading independent stockbroking and research firm, hosted the first instalment of its “Wealth Insights” series of investor events on Tuesday 28th April 2015. The event, titled “Insurance Sector Opportunities” focused on the outlook for the Insurance sector and brought together industry leaders with institutional and high net worth investors. The session’s discussion focused on unearthing deeper insights into sector dynamics that should better inform investment decisions.

The event kicked off with Asia Securities’ Insurance sector analyst, Ms. Lourdeena Kudaliyanage, presenting highlights from the sector report and Asia Securities’ positive outlook of the Insurance industry. Ms. Kudaliyanage’s presentation concluded that the sector is underpenetrated with affordability being a key driver of life insurance. Key factors which will affect the insurance industry will be GDP growth, increased public awareness on the products, and consolidation opportunities with regulatory changes.

The analyst presentation was followed by a key note by Mr. Deepthi Lokuarachchi, Chairman, Sri Lanka Insurance Corporation. His key note concluded that GWP growth will come mostly through higher premiums as insurance companies start adjusting pricing upwards to match the risk. Furthermore, he sees life insurance companies will be looking more aggressively towards growth. The risk to the industry will remain the threat of price competition with the large number of players present in the market.

The key note address was followed by a panel discussion consisting of prominent industry figures; Mr. Deepthi Lokuarachchi, Chief Executive Officer, Sri Lanka Insurance Corporation; Mr. Manjula De Silva, Chairman, National Insurance Trust Fund; Dr. Jagath Alwish, Director, Ceylinco Insurance PLC.

Mr. De Silva started off the panel discussion by stating that rural penetration would be higher but, the top end of the Colombo market is one which is quite underpenetrated and is a challenging one to grow. It’s not a lack of awareness but, a lack of competent people to sell the product to this market segment which is the main bottleneck. Furthermore, he stated that affordability and consumer spending power will be the key drivers of life insurance growth going forward.

Dr. Alwis agreed clash royale free gems no human verification with Mr. De Silva that the top of the market hasn’t been tapped in yet. Or it could be that this market isn’t worried about protection and are looking primarily at the return which is something that insurance companies should focus on. He went on to state that this year will be crucial for the industry due to risk based capital implementation, segregation of the general insurance and life insurance businesses, and the listing of the insurance companies. Smaller companies, who have underpriced to drive market share, might lose investor attraction with no life insurance result to offset general insurance losses leading to consolidation.

High combined ratios will lead to smaller players seeing profitability issues per Mr. Lokuarachchi. He went on to state that risk based capital implementation will drive the unprofitable player to either raise more capital or look towards M&A and sees consolidation as a key focus going forward.

About Asia Securities
Asia Securities, Sri Lanka’s leading independent stock brokerage firm, offers best-in-class research across macroeconomics and multiple sectors listed on the Colombo Stock Exchange. The “Wealth Insights” series which has garnered significant investor interest, focuses on investment ideas and outlook for key sectors. Asia Securities provides the broadest reach among investors including domestic institutional, high net worth and retail, as well as foreign institutional and high net worth clients.