Ceylinco Life Insurance Limited


Glossary of key terms

1. Acquisition Expenses

All expenses related to, the acquisition of premium including commission expenses.

2. Actuary

An expert concerned with the application of probability and statistical theory to problems of insurance, investment, financial management and demography.

3. Actuarial Valuation

A determination by an actuary at a specific date of the value of a life Insurance Company’s assets and its liabilities. The purpose of a valuation is to ensure that the Company holds adequate assets to fund the Company’s liabilities.

4. Approved Assets

Assets that are included in determining an insurer’s statutory solvency margin, specified under the rules made by the Insurance Board of Sri Lanka under the regulation of the Insurance Industry
Act No.43 of 2000.

5. Annuity

A series of regular payments. Annuities include annuities certain, where payments are made at definite times and life annuities where payments depend on the survival of an annuitant. A life Annuity is a contract that provides a regular payment, typically monthly, during the life time of the policyholder or a fixed period if less. If the payment starts at the outset of the contract, it is an immediate annuity. If it starts at some point in the future, it is a deferred annuity.

6. Beneficiary

The person or financial institution (for e.g. a trust fund) named in the policy as the recipient of insurance money in the event of the policyholder’s death.

7. Bonus

Bonus is a method of distribution of surplus amongst the participating policyholders of a Life Insurance Company. A bonus is an enhancement to the basic sum assured under a contract and is declared as a percentage of the sum assured.

8. Claims

The amount payable under a contract of insurance arising from the occurrence of an insured event.

9. Claims Outstanding

The amounts provided to cover the estimated ultimate cost of settling claims arising out of events which have been notified by the Reporting date, being sums due to beneficiaries together with claims handling expenses, less amounts already paid in respect of those claims.

10. Commission

Remuneration to an intermediary for services such as selling and servicing an insurer’s products. This is one component of acquisition expenses.

11. Dividend Cover

Profits after tax divided by dividend measures the number of times dividends are covered by distributable profits for the period.

12. Earnings Per Share

Profit attributable to ordinary shareholders divided by the weighted average number of ordinary shares.

13. Gross Written Premium

Premium to which the insurer is contractually entitled and receivable in the accounting period.

14. Global Reporting initiative (GRI)

A leading organisation in the sustainability field. GRI promotes the use of sustainability reporting as a way for organisations to become more sustainable and contribute to sustainable development.

15. Insurance

Insurance is a contract whereby one party the insurer, in return for a consideration i.e., the premium, undertakes to pay to the other party – the insured, a sum of money or its equivalent in kind, upon the happening of a specified event that is contrary to the interest of the insured.

16. Long Term insurance

The funds or funds to be maintained by an insurer in respect of its Life Insurance business in accordance with the Regulation of the Insurance Industry Act No. 43 of 2000.

17. Interim Payments

Periodic payments to the policyholders on a specific type of policy.

18. Life Surplus

The excess of the assets over the liabilities as determined by the actuary and after the distribution of dividends to policyholders.

19. Lapsed Policy

A policy terminated at the end of the grace period because of
non-payment of premiums.

20. Life insurance business

Insurance (including reinsurance) business falling within

the classes of insurance specified as Long Term Insurance Business under the Regulation of the Insurance Industry Act
No. 43 of 2000.

21. Market Capitalisation

Number of shares in issue multiplied by the market value of each share as at the Reporting date.

22. Maturity

The time at which payment of the sum insured under a Life Insurance policy falls due at the end of its term.

23. Net written Premium

Gross Written Premium adjusted for the reinsurance incurred.

24. Net Assets Per Share

Net assets attributable to Shareholders’ equity divided by the number of Ordinary shares issued.

25. Net Claims Incurred

Claims incurred less reinsurance recoveries.

26. Policy

The printed document issued to the policyholder by the Company stating the terms of the insurance contract.

27. Policy Loan

Under an insurance policy, the amount that can be borrowed at a specific rate of interest from the issuing Company by the policyholder, who used the value of the policy as collateral for the loan. In the event the policyholder dies with the debt partially or fully unpaid, the insurance company deducts the amount borrowed, plus any accumulated interest, from the amount payable.

28. Premium

The payment, or one of the periodic payments, a policyholder agrees to make for an insurance policy. Depending on the terms of the policy, the premium may be paid in one payment or a series of regular payments.

29. Reinsurance Commission

Commission received or receivable in respect of premium paid or payable to a reinsurer.

30. Reinsurance Premium

The premium payable to the reinsurer.

31. Return on Shareholders’ Equity

Profits after tax dividend by the capital employed as at the Reporting date.

32. Return on Total Assets

Profits after tax divided by total assets attributable to shareholders.

33. Revenue Reserve

An account which shows a financial summary of the insurance related revenue transactions for the accounting period.

34. Risk-based capital (RBC)

An amount of capital based on an assessment of risks that a company should hold to protect policyholders against adverse developments.

35. Surrender

The amounts refundable to Life policyholders when they terminate their insurance contracts after a specific period.