Ceylinco Life Insurance Limited


Understanding Our Financials

The statement of income of a life insurance company contains the income and expenses pertaining to the underwriting of life insurance. Thus, the statement of income of a life insurer contains income and expense items that do not appear in a statement of income of a manufacturing and trading business. Similarly, the statement of financial position of a life insurer also contains some industry – specific assets and liabilities.

This brief note is aimed at helping the reader to understand our financials and is to be read along with the explanatory notes to the Financial Statements and the glossary.

Statement of Comprehensive Income

For the Year Ended 31 December Comment Rs. ’000 Rs. ’000
Gross Written Premiums The main source of income of a life insurer is the premium paid by customers for the risks transferred to the life insurer through the insurance contract. GWP is comparable to the ‘turnover’ of a manufacturing and trading company. 15,027,600
Premiums Ceded to Reinsurers Reinsurance is the process by which part of the risks undertaken by the life insurer is transferred to a reinsurer, for which reinsurance premium is paid by the insurer to the reinsurer. (373,829)
Net Written Premiums Net earned premium is the premium earned by the insurer for the financial year. 14,653,771
Fees and Commission Income Fees and commission income includes the charges and policy fees paid by customers. 120,399
Investment Income Investment income contains the interest income, dividend income and rental income on investments made out of the Life Fund, after deducting the related investment expenses. 8,180,786
Realised Gains Realised gains and losses include gains and losses arising on sale of financial assets. (5,283)
Fair Value Gains and Losses Fair value gains and losses are gains and losses that arise from changes in fair values of assets. 470,023
Other Operating Revenue Other income comprises fees charged for policy administration services, disposal gains on property, plant and equipment and miscellaneous income. 14,763
Other Revenue 8,780,689
Net Income 23,434,460
Gross Benefits and
Claims Paid
Gross benefits and claims paid refer to the total amount of claims and claim related expenses incurred during the year. (6,800,076)
Claims Ceded to Reinsurers Claims ceded to reinsurers contain the proportion of claims paid, which was recovered from reinsurers. 148,394
Gross Change in Contract Liabilities Gross change in contract liabilities is the net transfer to the Life Fund during the period. (8,397,889)
Net Benefits and Claims (15,049,571)
Acquisition Cost Acquisition cost refers to the commission expenses incurred for the financial year. Life insurance business is predominantly transacted through independent contractual Agents who are paid commissions based on premiums they collected. (1,693,985)
Other Operating and
Administrative Expenses
Other operating and administrative expenses include administration, staff, sales and marketing expenses related to the Company (2,937,262)
Finance Cost Finance cost includes charges on the financial services provided by financial institutions, particularly bank charges. (9,915)
Total Other Expenses (4,641,162)
Profit Before Tax 3,743,727
Income Tax Expense Income tax expense comprises the current and deferred tax. Current tax is the expected tax payable on the taxable income for the year and any adjustment to tax payable in respect of previous year. (664,686)
Profit for the Year 3,079,041

Statement of Financial Position

As at 31 December 2016 Comment Rs. ’000
Intangible Assets 2,759
Property, Plant and Equipment 7,068,634
Investment Properties 1,796,000
Investment in Subsidiaries 1,021,000
Investment in Associates 437,994
Financial Instruments Financial instruments represent the financial investments made out of the Life Fund by a life insurer, with the aim of earning investment income to increase profitability of the Company. Such investment income is accumulated to the Life Fund. 77,496,111
Employee Gratuity Benefit Asset 697,338
Employee Pension Benefit Asset 891,934
Reinsurance Receivables Loans to life policyholders include the loans granted by the life insurer to policyholders. Eligible policyholders can obtain loans up to a predetermined percentage of the surrender value of their policy. 41,298
Income Tax Receivables 1,042,571
Loans to Life Policyholders Reinsurance receivables represent the amounts receivable by the life insurer for claims made by the policyholders. 1,378,954
Premium Receivables Premium receivables represent the gross written premium accrued up to the Reporting date. 214,604
Accrued Income 3,469,524
Other Assets 315,112
Cash and Cash Equivalents 584,256
Total Assets 96,458,089
Equity and Liabilities
Equity Attributable to Equity Holders of Parent
Stated Capital 500,001
Retained Earnings 4,003,753
AFS Reserve (60)
Revaluation Reserves 96,484
Special Reserve 7,311,651
Total Equity 11,911,829
Insurance Contract Liabilities – Life Due to the long term nature of life insurance business, life insurers are required to maintain a separate fund to meet future policyholder obligations. This fund is known as ‘Insurance Contract Liabilities – Life’, or more commonly as ‘Life Fund’. An actuarial valuation is performed at each year end to determine the size of the fund necessary in comparison to the assets maintained out of the fund. Any excess of assets over the policy liabilities of the fund, known as the ‘Life Surplus’, is transferred to the shareholders’ funds of the Company. 77,925,114
Insurance Contract Liabilities –
Unit Linked
These items represent the balances of the other separately identifiable funds, in addition to the Life Fund, maintained by a life insurer. 265,685
Insurance Contract Liabilities –
Family Takaful
Individual Investment Fund ISF 56,881
Other Financial Liabilities 3,980,013
Deferred Tax Liabilities 227,716
Reinsurance Payables Reinsurance payables contain amounts outstanding to be paid to reinsurers by a life insurer as at the Reporting date. 25,837
Trade and Other Payables 1,824,371
Bank Overdraft 230,080
Total Liabilities 84,546,260
Total Equity and Liabilities 96,458,089