live healthier, longer and better lives

160 Pages·2017·3.59 MB·English

AIA INSURANCE LANKA PLC
LIVE HEALTHIER,
LONGER AND
BETTER LIVES
ANNUAL REPORT 2017
AIA Insurance Lanka PLC • Annual Report 2017
LIVE HEALTHIER,
LONGER AND
BETTER LIVES…
At AIA, we believe in the power of insurance to make a positive
difference in people’s lives. We do this through our products and
services as well as by actively promoting the health and well-being
of our customers, employees and agents and the communities in
which they live and work. We are committed to helping people to
live Healthier, Longer and Better lives.
This mission of encouraging healthy living becomes most relevant
now, more than ever before, to Sri Lanka. With the rise of Non-
Communicable Diseases (NCDs), largely attributed to poor dietary
habits and physical inactivity, it remains an important endeavour to
motivate people to make healthy choices while supporting them in
making the most out of life.
ANNUAL REPORT 2017 | 1
LIVE HEALTHIER, LONGER AND BETTER LIVES…
CONTENTS
OVERVIEW
Financial Highlights 5
Milestones 2017 6
Chairman’s Review 8
CEO’s Review 10
MANAGEMENT DISCUSSION & ANALYSIS
Environment 14
Regulatory Update Review 16
Industry Review 17
Customer Review 19
Product Review 20
Community Review 23
Business Review 23
Operations Review 24
Investment Strategy 24
People Review 25
Financial Review 27
Outlok 29
GOVERNANCE
Board of Directors 32
Senior Management Team 36
The Annual Report of the Board of Directors 40
Corporate Governance 46
Risk Management Review 66
Audit & Compliance Committee Report 71
Remuneration Committee Report 73
Related Party Transactions Review Committee Report 74
Investment Committee Report 75
Actuary’s Report 76
Statement of Solvency 77
Statement of Approved Assets 77
FINANCIAL INFORMATION
Financial Calendar 80
CEO’s and CFO’s Responsibility 81
Directors’ Statement of Responsibility on
Financial Reporting 82
Independent Auditor’s Report 83
Consolidated Statement of Financial Position 84
Consolidated Income Statement 85
Consolidated Statement of Comprehensive Income 86
Statement of Changes in Equity - Group 87
Statement of Changes in Equity - Company 88
Consolidated Statement of Cash Flows 89
Long Term Insurance Statement of
Financial Position - Supplemental 90
Insurance Revenue Account 90
Notes to the Consolidated Financial Statements
and Significant Accounting Policies 91
OTHER INFORMATION
Quarterly Analysis 2017 138
Quarterly Analysis 2016 139
Five Year Summary 140
Share Information 142
Our Local Reach 145
Distribution Network 146
Glossary 149
Notice of Meeting 154
Form of Proxy 155
Corporate Information IBC
2 | AIA INSURANCE LANKA PLC
Our Vision
Being the pre-eminent Life Insurance Provider in Sri Lanka.
Our Purpose
To play a leadership role in driving economic and social development
in Sri Lanka.
Our History
In December 2012, AIA Company Limited (“AIA”), Hong Kong
acquired the entirety of the shareholding in AIA Holdings Lanka
(Private) Limited, the majority shareholder who in turn holds a direct
holding of 87.28 per cent in AIA Insurance Lanka PLC. AIA also
acquired a direct 5 per cent and subsequently through a voluntary
offer a further 4.88 per cent direct holding in AIA Insurance Lanka
PLC in May 2013.
AIA now owns an effective shareholding of 97.16 per cent in AIA
Insurance Lanka PLC.
Please scan the QR code to
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Annual Report 2017.
ANNUAL REPORT 2017 | 3
LIVE HEALTHIER, LONGER AND BETTER LIVES…
AIA GROUP AT A GLANCE
AIA IS THE LARGEST INDEPENDENT PUBLICLY LISTED THE LARGEST LISTED
PAN-ASIAN LIFE INSURANCE GROUP – WITH A COMPANY ON THE HONG
PRESENCE IN 18 MARKETS ACROSS THE ASIA-PACIFIC KONG STOCK EXCHANGE
REGION. WHICH IS INCORPORATED AND
HEADQUARTERED IN HONG KONG
THE SECOND LARGEST LIFE
INSURER IN THE WORLD*
100% FOCUSED ON ASIA-
PACIFIC
#1 WORLDWIDE FOR MDRT
MEMBERS;
The standard of excellence in the
life insurance business
PRESENCE IN
SERVING THE HOLDERS OF MORE
18 MARKETS
THAN 30 MILLION INDIVIDUAL
IN ASIA-PACIFIC
POLICIES
CHINA 1919 BRUNEI 1957 TAIWAN 1990 OVER 16 MILLION PARTICIPATING
HONG KONG 1931 AUSTRALIA 1972 VIETNAM 2000 MEMBERS OF GROUP INSURANCE
SINGAPORE 1931 NEW ZEALAND 1981 INDIA 2001 SCHEMES
THAILAND 1938 MACAU 1982 SRI LANKA 2012
PHILIPPINES 1947 INDONESIA 1982 MYANMAR* 2013 PROVIDES PROTECTION TO PEOPLE
ACROSS THE REGION WITH TOTAL
MALAYSIA 1948 KOREA 1987 CAMBODIA 2015
SUM ASSURED OF OVER
* AIA has a representative office in Myanmar. US$1 TRILLION
MADE 13 MILLION BENEFIT
PAYMENTS DURING 2016, HELPING
CUSTOMERS AND THEIR FAMILIES
TO COPE WITH CHALLENGES AT
DIFFERENT LIFE STAGES
Note :
* Source : Bloomberg. 30 June 2017
All the figures are as of November 2016,
unless otherwise stated
4 | AIA INSURANCE LANKA PLC
OVERVIEW
FINANCIAL HIGHLIGHTS
Financial Highlights - Group 2017 2016 %
Total revenue (LKR mn) 17,221 15,079 14
Profit before tax (LKR mn) 7,599 794 857
Gross written premium (LKR mn) 11,511 10,104 14
Net assets (LKR mn) 11,284 5,366 110
Total assets (LKR mn) 52,584 46,084 14
Insurance liabilities (LKR mn) 38,197 38,188 -
Basic earnings per share (LKR) 239.38 16.61 1,341
Dividend per share (LKR) 50.00 49.50 1
Market capitalisation (LKR mn) 10,070 8,613 17
TOTAL TOTAL
17.2 52.6
REVENUE ASSETS
LKR billion 2016 : LKR 15.1 bn LKR billion 2016 : LKR 46.1 bn
NET ASSETS
LKR bilion 11.3
2016 : LKR 5.4 bn
Total Revenue Total Assets
LKR billion LKR billion
20 60
50
15
40
10 30
20
5
11.0 12.1 12.6 15.1 17.2 10 44.1 47.5 45.8 46.1 52.6
0 0
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
Net Assets Insurance Liability
LKR billion LKR billion
12 40
10 35
30
8 25
6 20
4 15
10
2 4.6 4.9 6.4 5.4 11.3 5 33.7 36.0 36.9 38.2 38.2
0 0
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
ANNUAL REPORT 2017 | 5
LIVE HEALTHIER, LONGER AND BETTER LIVES…
JANUARY FEBRUARY
AIA VITALITY, MAKING SRI AIA DECLARED A STRONG 9.46%
LANKANS HEALTHY, ONE STEP DIVIDEND FOR ITS CUSTOMERS
AT A TIME AIA declared a dividend of 9.46 per cent
The AIA Vitality programme, for its policyholders. It was yet another
the first of its kind, is the most year of AIA delivering impressive
rewarding wellness platform dividend figures to policyholders and
in Sri Lanka, aimed at making this consistency is testament to the
Sri Lankans healthier, one step strength and outstanding investment
at a time. It’s a science-backed strategy of AIA’s Life Fund, which
wellness programme that provides stands at LKR 32 billion. Since AIA
participants with the knowledge, introduced the system of declaring an
tools and motivation to improve annual dividend, the amount declared
their health. every year has always been well above
the guaranteed amount promised by
the Company to its policyholders. The
MARCH dividend is a significant advantage to
AIA APPOINTS DAVID AIA’s policyholders who are already
BECKHAM AS ITS GLOBAL enjoying protection benefits.
AMBASSADOR
AIA Group signed a multi-
year agreement with David
Beckham, under which he
became the Company’s
Global Ambassador. In this MILESTONES
newly created role, Beckham
will support AIA in its goal of
helping people in the Asia-
Pacific region live healthier, OF 2017
longer, better lives.
MAY
AIA TOWER, OPENS FOR
BUSINESS
AIA moved into its brand new
Head Office building, the AIA
Tower, located at 92, Dharmapala
Mawatha, Colombo 7. The move to
the new building, was testament to
AIA’s deep commitment to further
expand its growing business in
Sri Lanka. The AIA Tower is a
APRIL contemporary, 12 storey office
AIA SRI LANKA CELEBRATES ITS PEAK PERFORMERS building, which, for the first time,
AIA Sri Lanka’s Annual Sales Convention for the year 2017, was allows all of AIA Sri Lanka’s
held on a grand scale with 1,300 Wealth Planners from across the employees based in Colombo the
island convening to celebrate their notable achievements at the opportunity to work together under
Bandaranaike Memorial International Conference Hall (BMICH). one roof. The move creates greater
Held under the theme ‘Race to the Top’, these peak performers were synergy between functions and will
honoured for their indomitable stamina in forging ahead and emerging of course help the growth of AIA’s
on top of their game. business.
JUNE
6 LIVES SAVED, THANKS TO AIA’S POSON SAFETY PROGRAMME
Six lives were saved this year, thanks to AIA’s Poson Safety Programme. Now in its 24th
consecutive year, the programme aims at protecting the lives of the throngs of pilgrims
travelling to Anuradhapura, Polonnaruwa and Dambulla for Poson (One of Sri Lanka’s
important Buddhist festivals). Every year, AIA joins hands with the Sri Lanka Police, Sri
Lanka Lifesaving, the Civil Security Division and the Sri Lanka Navy in deploying lifeguards
to watch over the reservoirs in the area, which are popular bathing and swimming spots.
Over 200 lives have been saved due to this programme since its inception.
6 | AIA INSURANCE LANKA PLC
OVERVIEW
JULY
AIA HONOURED WITH PLACE
IN THE GREAT PLACE TO
WORK® HALL OF FAME
AIA Sri Lanka takes great pride
in entering ‘Sri Lanka’s Best
Companies to work for – Hall of
Fame,’ as the company collected
its fifth consecutive Great Place To
Work® recognition. This incredible
SEPTEMBER
achievement is testament to AIA’s
AIA GROUP CHIEF EXECUTIVE MET THE
commitment to doing the right
PRESIDENT AND PLEDGES SUPPORT TO SRI
thing, the right way and most
LANKA
importantly, with the right people.
Mr. Ng Keng Hooi met with His Excellency the
President Maithripala Sirisena, during his first visit
to Sri Lanka since his appointment as Group Chief
Executive and President of AIA Group. During their
meeting, he pledged AIA’s support to Sri Lanka
and reiterated AIA Group’s commitment to growing
and investing in the country. He noted that AIA’s
investment in Sri Lanka has grown considerably
since entering the market in 2012 with an
investment of USD 109 million and expressed
confidence that the growth will continue.
OCTOBER
AIA PENSIONS MONTH
AIA’s Easy Pensions campaign which was
launched on 8th October, to coincide with National
AUGUST
Pensioners Day, also coincided with the AIA
AIA AND WAYAMBA UNIVERSITY CONGRATULATE THE FIRST BATCH OF GRADUATES OF
Pensions Month. Now in its third consecutive
THE DIPLOMA IN PERSONAL FINANCIAL MANAGEMENT
year, the AIA Pensions Month is rolled out in
AIA collaborated with the Wayamba University of Sri Lanka in successfully completing the
October, with a concentrated effort to create more
Diploma in Personal Management for Wealth Planners and Wealth Planners’ Managers.
awareness about the need to start planning for
This was the first time such a programme for insurance agents was carried out in a local
retirement. During this time, AIA’s nationwide team
university. The 28 certificate recipients were trained under the guidance of an expert panel
of Wealth Planners put all their energy into guiding
of lecturers from the Department of Accountancy and the Faculty of Business Studies &
Sri Lankans to a more secure and ideal retirement.
Finance of the Wayamba University.
NOVEMBER
AIA VITALITY INTRODUCES CHARITY REWARDS OPTIONS
AIA Vitality members were given the option of contributing their weekly reward to the Little
Hearts Foundation, for children with heart disease and critical illness. This can be done by
staying active to achieve your weekly targets on AIA Vitality and selecting the ‘Donation’ option
when claiming rewards. Each time you do so, AIA will donate LKR 500 towards the construction
of the Critical Care Unit at the Lady Ridgeway Hospital, facilitated by the Little Hearts
Foundation. By choosing to donate your rewards to this worthy cause you not only give back to
the community and support children in need but also help those kids with early heart problems
in Sri Lanka.
DECEMBER
AIA INSURANCE TOPS MDRT IN SRI LANKA
AIA VITALITY JOINS HANDS WITH ‘RUN FOR
AND CROSSES THE 100 MEMBER MARK
THEIR LIVES’ IN THE BATTLE AGAINST CANCER
AIA Sri Lanka crossed 100 MDRT (Million Dollar
After the successful sponsorship of the ‘Run for Their
Round Table) members for 2016, making it the
Lives’ (RFTL) charity run, AIA took the partnership
first and only insurer in Sri Lanka to do so! AIA had
further by encouraging its Vitality members to
the most number of MDRT members in Sri Lanka,
contribute towards the Apeksha Cancer Hospital in
with a total of 110 MDRT certificates awarded
Maharagama. The latest charity rewards option on
to AIA Wealth Planners and Bancassurance
AIA Vitality, allows users to make a donation towards
Executives in 2016. This achievement is
the hospital. All you have to do is stay active and
testament to the high calibre of advisors recruited,
engaged with AIA Vitality to achieve your weekly
trained and employed by AIA, to provide the best
target and select the ‘Donation’ option when claiming
protection and savings solutions to Sri Lankans.
your reward. AIA will then donate LKR 500 to the
This is the second consecutive year that AIA tops
Apeksha Cancer Hospital in Maharagama.
MDRT from Sri Lanka
ANNUAL REPORT 2017 | 7
LIVE HEALTHIER, LONGER AND BETTER LIVES…
CHAIRMAN’S REVIEW
I’m pleased to report as Chairman of the Board of Directors
that 2017 has been yet another year which signifies AIA Sri
Lanka’s continued commitment in delivering robust growth,
thus providing enhanced value to all stakeholders.
The Asia Pacific region’s economic growth is driven by its
fast-growing middle class, with increasing disposable income
fuelling rapid changes in consumer behaviour including the
need for insurance. AIA is uniquely placed with its strong
heritage in the Asia Pacific region; equipped with updated
technology and holistic customer propositions, catering to the
needs of the evolving Asia Pacific consumer. The conditions in
Sri Lanka are, in many respects, consistent to that of its Asia
Pacific peers, and we remain optimistic of our ability to meet
evolving customer needs.
2017 was another strong year for AIA Sri Lanka reporting 14
per cent growth in life insurance Gross Written Premiums to
LKR 11,511 million.
The Company recorded a consolidated after tax profit of LKR
7,361 million during 2017 compared to LKR 511 million in
2016. The major driver of the significant increase was the
downward shift in market interest rates during the year
compared to an upward shift in 2016. In 2017 the 10 year
bond rate fell 230 basis points compared with an increase
of 215 basis points in 2016, which resulted in an increase
in profit of LKR 6,850 million. Despite the yield movements,
the operating performance of the business remained broadly
stable.
WILLIAM LISLE
CHAIRMAN
STRONGER PERFORMANCE
DURING THE YEAR
2017 WAS ANOTHER STRONG YEAR FOR
AIA SRI LANKA REPORTING 14 PER CENT
GROWTH IN LIFE INSURANCE GROSS
WRITTEN PREMIUMS TO LKR 11,511
MILLION.
8 | AIA INSURANCE LANKA PLC