Ceylinco Insurance had seen a decline in profitability in the year ended December 31, 2008 with the pre-tax profit down 30% to Rs.732.4 million and the after-tax profit down 44.4% to Rs.564.6 million but said in its annual report tht it had done well in a year full of challenges.

Despite reduced profitability, the company has announced a dividend of Rs.2 per share for the year under review maintaining its previous year’s dividend rate.

There was no statement from the company’s Chairman/MD, Mr. Lalith Kotelawala, published in the latest annual report of the company.

Mr. Ajit Gunawardena, Joint Deputy Chairman of the company who heads Ceylinco’s non-life insurance business, said that the company "still firm and tall in the face of adversity" not only meeting a plethora of formidable challenges head-on but had grown at an incredible rate despite them.

"Once again, your company has been tested by the fire, and proved invulnerable, indestructible and timeless and moreover, set and on many occasions raised the benchmark," he had said in the annual report.

In the non-life insurance segment, Ceylinco had grown gross written premium 9.05% to Rs.11.3 billion while net claims/benefits payable had grown 8.82% to Rs.4.8 billion. Investment and other income were up 18.8% to Rs.606.1 million.

In life insurance the gross written premium was up 20.6% to Rs.6.8 billion and net claims/benefits payable 19.9% to Rs.2.1 billion. There was a 49.1% increase in long-term insurance funds to Rs.4.4 billion while investment and other income were up 72.9% to Rs.2.6 billion.

Gunawardena reported that Ceylinco’s general insurance segment which was the market leader had recorded "unprecedented growth’’ during the year under review.

Motor insurance brought in nearly Rs.6.6 billion in premiums, up 6% year-on-year, while non-motor premium income had grown 14% to Rs.4.7 billion.

Gunawardena said that along with significant revenue growth market share was also up with their motor business holding 39% of the market and non-motor 33% market share.

Discussing the life insurance performance, Mr. R. Renganathan, Joint Deputy Chairman, noted that they have led the market for the fifth consecutive year with a market share of nearly 34% of the life insurance segment.

Their life division had sold 188,483 new policies in the year under review averaging 15,700 policies a month.

"Investments pertaining to our Life Fund are made in conformity with the investment guidelines stipulated under the regulations of the Insurance Industry Act No.43 of 2000. These investments are subject to regular monitoring by the Insurance Board of Sri Lanka (IBSL)," Renganathan said.

He noted that by making substantial investments in government securities and the licensed commercial banking sector, they had significantly contributed to the country’s economy with 42% of the life fund invested in government securities, 17% in licensed private banks, 15% in state banks, 13% in real estate, 7% in corporate debt and 6% elsewhere.

Renganathan also said that the company’s solvency margin was five times the minimum prescribed by the statute demonstrating the company’s financial strength and its ability to honour all future claims.

"Our solvency margin is annually certified by an independent international consulting actuary, Watson Wyatt Worldwide, a leading firm of Consulting Actuaries of international repute," he said.

In a management discussion and analysis, the report says that the victory of the armed services over terrorism will impact positively on the economic, social and political and environment of the country although there was a risk of sporadic guerrilla attacks by terrorist remnants. But this will not necessitate the hitherto large defence budget of recent years.

Ceylinco was confident that mega infrastructure projects and reconstruction in the Northern and Eastern provinces as well as a resurgent tourism industry and growth in agriculture, services and industry will ginger the economy.

However, the analysis advocated caution against over optimism saying that while the ushering in of peace will be a growth catalyst, it was likely that the adverse global financial situation will get worse before an upturn will occur.

"This upturn can optimistically be expected only by the second half of 2009. Therefore the repercussions of the global economic environment will continue to inhibit rapid economic growth," the analysis said.

Ceylinco Insurance has a stated capital of Rs.1.3 billion, a revaluation reserve of Rs.828.6 million and revenue reserves of Rs.4.1 billion at group level and Rs.4.2 billion at company level.

The major shareholders of the company include Ciesot (Pvt) Limited (22.06%), Ceylinco Limited (13.63%) and The Finance Co. Ltd. (8.79%).

Other Ceylinco group companies including Seylan Bank (4.67%), Ceylinco Development Bank (2.82%), Ceylinco Finance (2.06%), Ceylinco Life Holdings (1.72%), The Finance Company (0.85%) and Ceylinco Shriram Securities Holdings (0.80%) are among the top 20 voting shareholders.