Union Assurance : Interim Financial Statements as @ 31st March 2024

Union Assurance PLC

Condensed Interim Financial Statements For The Three Months Ended 31 March 2024

2 Union Assurance PLC | Condensed Interim Financial Statements For The Three Months Ended 31 March 2024

INCOME STATEMENT

For the period ended 31st March	2024	2023	Change
Note	Rs. '000	Rs. '000	%

Gross written premium	6
Premium ceded to reinsurers
Net written premium
Other revenue
Net investment income
Net realised gains
Net fair value gains
Other income
Total other revenue
Total net revenue
Benefits, claims and expenses
Net insurance benefits and claims	paid

Net change in insurance claims outstanding

Change in contract liabilities - Life Fund

Underwriting and net acquisition costs (net of reinsurance)

Other operating, administrative and selling expenses

Depreciation and amortisation

Total benefits, claims and expenses

Profit from operations

Share of results of equity accounted investee, net of tax

Profit before tax

Income tax expenses

7

Profit for the period

Earnings per share

Basic (Rs.)

Diluted (Rs.)

The notes form an integral part of these interim financial statements.

4,887,227

(345,885)

4,541,342

2,764,350

180,665

503,402

4,747

3,453,164

7,994,506

(1,442,688)

(59,456)

(3,757,560)

(901,139)

(1,093,676)

(147,949)

(7,402,468)

592,038

64,095

656,133

(172,595)

483,538

0.82

0.82

4,171,527 17

(230,020) 50

3,941,507 15

2,443,513 13

106,860 69

1,082 46,425

6,023 (21)

2,557,478 35

6,498,985 23

(1,574,288) (8)

59,490 200

(2,807,224) 34

(759,031) 19

(749,687) 46

(134,123) 10

(5,964,863) 24

534,122 11

71,183 (10)

605,305 8

(160,729) 7

444,576 9

0.75 9

0.75 9

Condensed Interim Financial Statements For The Three Months Ended 31 March 2024 | Union Assurance PLC

3

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the period ended 31 March		2024	2023	Change
			Rs. '000	Rs. '000	%
Profit for the period				9
		483,538	444,576
Items that are or may be reclassified to profit or	loss
Fair value reserve (available for sale financial assets)
Net change in fair value of available for sale financial	assets		207,016	149,494
Share of net change in fair value of available for sale financial assets	of
equity accounted investee, net of tax			(455)	11,013
Related tax			-	-
			206,561	160,507	29
Net change in liabilities of insurance contracts arising from fair value changes in available
for sale financial assets			475,163	329,389
Net change in fair value of available for sale financial	assets of insurance liabilities
transferred to the income statement			(15,646)	24,314
Related tax			-	-
			459,517	353,703	30
			666,078	514,210
Other comprehensive income, net of tax			666,078	514,210	30
Total comprehensive income for the period, net of tax		1,149,616	958,786	20

The notes form an integral part of these interim financial statements.

4 Union Assurance PLC | Condensed Interim Financial Statements For The Three Months Ended 31 March 2024

STATEMENT OF

FINANCIAL POSITION

As at		31.03.2024	31.12.2023
	Note	Rs. '000	Rs. '000
Assets
Intangible assets		1,058,613	1,130,585
Property, plant and equipment		3,007,575	3,006,118
Right of use assets		401,343	418,566
Investment in equity accounted investee		2,109,641	2,046,001
Financial investments	9	83,601,333	83,419,773
Loans to life policyholders		2,425,337	2,368,021
Reinsurance receivable		429,494	447,558
Premiums receivable		881,186	1,051,444
Receivables and other assets		1,020,787	942,120
Cash in hand and at bank		980,601	839,475
Total assets		95,915,910	95,669,661
Equity and liabilities
Equity
Stated capital		1,000,000	1,000,000
Available for sale reserve		4,000,133	3,334,055
Revaluation reserve		2,563,095	2,563,095
Restricted regulatory reserve	10	3,381,934	3,381,934
Other reserves		80,774	76,543
Retained earnings		9,132,732	13,805,444
Total equity		20,158,668	24,161,071
Liabilities
Insurance contract liabilities	11	68,784,204	65,043,384
Insurance contract liabilities - Unit Linked		726,663	718,692
Lease liabilities		406,965	422,540
Employee benefit liabilities		193,158	190,578
Reinsurance payables		317,748	365,027
Other liabilities		5,253,561	4,645,809
Bank overdraft		74,943	122,560
Total liabilities		75,757,242	71,508,590
Total equity and liabilities		95,915,910	95,669,661

The notes form an integral part of these interim financial statements.

I certify that the above financial statements comply with the requirements of the Companies Act No. 07 of 2007.

Asha Perera

Chief Finance Officer

The Board of Directors is responsible for the preparation and presentation of these financial statements. Signed on behalf of the Board:

K. N. J. Balendra	P. T. Wanigasekara
Chairperson	Director
Colombo
14 May 2024

Condensed Interim Financial Statements For The Three Months Ended 31 March 2024 | Union Assurance PLC

5

STATEMENT OF

CHANGES IN EQUITY

Rs. '000

Stated			Reserves
capital	Restricted	Revaluation		Reserve	Other reserves
	regulatory	reserve		on	Available	Other
	reserve			merger	for sale	capital
					reserve	reserves

Retained earnings

Total

Balance as at 1 January 2023	1,000,000	3,381,934	2,267,979	16,752	(2,564,622)	68,913	10,042,833	14,213,789
Profit for the period	-	-	-	-	-	-	444,576	444,576
Other comprehensive income for the period, net of tax
Net change in fair value of available for sale financial assets	-	-	-	-	149,494	-	-	149,494
Net change in liabilities of insurance contracts arising from
fair value changes in available for sale financial assets	-	-	-	-	353,703	-	-	353,703
Share of net change in fair value of available for sale
financial assets of equity accounted investee, net of tax	-	-	-	-	11,013	-	-	11,013
Tax on other comprehensive income	-	-	-	-	-	-	-	-
Total other comprehensive income	-	-	-	-	514,210	-	-	514,210
Total comprehensive income for the period	-	-	-	-	514,210	-	444,576	958,786
Transactions with owners, transfers, recorded directly
in equity
Contributions and distributions
First and final dividend 2022	-	-	-	-	-	-		-
Share based payments	-	-	-	-	-	3,627	-	3,627
Total contributions and distributions	-	-	-	-	-	3,627	-	3,627
Balance as at 31 March 2023	1,000,000	3,381,934	2,267,979	16,752	(2,050,412)	72,540	10,487,409	15,176,202
Balance as at 1 January 2024	1,000,000	3,381,934	2,563,095	16,752	3,334,055	59,791	13,805,444	24,161,071
Profit for the period	-	-	-	-	-	-	483,538	483,538
Other comprehensive income for the period, net of tax
Net change in fair value of available for sale financial assets	-	-	-	-	207,016	-	-	207,016
Net change in liabilities of insurance contracts arising from
fair value changes in available for sale financial assets	-	-	-	-	459,517	-	-	459,517
Share of net change in fair value of available for sale
financial assets of equity accounted investee, net of tax	-	-	-	-	(455)	-	-	(455)
Tax on other comprehensive income	-	-	-	-	-	-	-	-
Total other comprehensive income	-	-	-	-	666,078	-	-	666,078
Total comprehensive income for the period	-	-	-	-	666,078	-	483,538	1,149,616
Transactions with owners, transfers, recorded directly
in equity
Contributions and distributions
First and final dividend 2023	-	-	-	-	-	-	(5,156,250)	(5,156,250)
Share based payments	-	-	-	-	-	4,231	-	4,231
Total contributions and distributions	-	-	-	-	-	4,231	(5,156,250)	(5,152,019)
Balance as at 31 March 2024	1,000,000	3,381,934	2,563,095	16,752	4,000,133	64,022	9,132,732	20,158,668

The notes form an integral part of these interim financial statements.

6 Union Assurance PLC | Condensed Interim Financial Statements For The Three Months Ended 31 March 2024

STATEMENT OF CASH FLOWS

For the Period ended 31st March	2024	2023
Note	Rs. '000	Rs. '000

Cash flows from operations

Insurance premiums received

Reinsurance premiums paid

Insurance benefits and claims paid

Reinsurance claim received

Payments to intermediaries to acquire insurance contracts

Cash paid to and on behalf of employees

Interest received

Dividends received

Other operating cash flows

Cash generated from operating activities	A
Income tax paid
Employee benefits paid
Interest paid on obligation to repurchase securities
Net cash flow from operating activities
Cash flows used in investing activities
Purchase of investments
Maturity proceeds of investments
Proceeds from sale of investments
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from sale of property, plant and equipment
Net cash used in investing activities
Net cash inflow before financing activities
Cash flows used in financing activities
Dividends paid to equity holders of the company
Settlement of lease liabilities
Obligation to repurchase securities
Settlement of obligation to repurchase securities
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the period	B
The notes form an integral part of these interim financial statements.

5,057,485

(130,424)

(1,690,811)

248,123

(931,168)

(443,832)

2,828,065

29,032

(975,194)

3,991,276

(404,042)

(6,091)

-

3,581,143

(13,415,495)

2,432,146

12,042,626

(29,410)

(13,406)

-

1,016,461

4,597,604

(4,352,517)

(56,344)

-

-

(4,408,861)

188,743

716,915

905,658

4,429,305

(60,146)

(1,744,774)

170,487

(804,801)

(278,959)

2,303,881

22,245

(1,040,924)

2,996,314

(332,041)

(5,618)

(192)

2,658,463

(7,423,486)

3,049,583

1,921,607

(4,876)

(4,836)

45

(2,461,963)

196,500

-

(40,006)

206,370

(206,370)

(40,006)

156,494

723,853

880,347

Condensed Interim Financial Statements For The Three Months Ended 31 March 2024 | Union Assurance PLC

7

For the Period ended 31st March	2024	2023
Note	Rs. '000	Rs. '000
NOTE A.
Reconciliation of profit before taxation with cash from operating activities
Profit before tax	656,133	605,305
Non - cash items included in profit before tax
Depreciation and amortisation	147,949	134,123
Provision for employee benefits	8,671	8,964
Net realised gains	(180,665)	(106,860)
Net fair value gains	(503,402)	(1,082)
(Gain) / loss on sale of property, plant and equipment	63	(23)
Amortisation of financial investments	(143,683)	(124,712)
Amortisation of lease liabilities	11,366	8,743
Scrip dividend income	(1,891)	-
Share of results of equity accounted investee	(64,095)	(71,183)
Share based payment expenses	4,231	3,627
Interest expense on obligation to repurchase securities	-	192
Profit before working capital changes	(65,323)	457,094
Net change in operational assets
Net change in reinsurance assets	18,064	(33,230)
Net change in premiums receivable	170,258	257,776
Net change in receivables and other assets	119,528	(77,634)
Net change in operational liabilities
Net change in life insurance contract liabilities	3,748,791	2,729,933
Net change in reinsurance liabilities	(47,279)	(9,269)
Net change in other liabilities	47,237	(328,356)
Cash generated from operating activities	3,991,276	2,996,314
NOTE B.
Cash and cash equivalents at the end of the period
Cash in hand and at bank	980,601	1,020,899
Bank overdraft	(74,943)	(140,552)
Cash and cash equivalents at the end of the period	905,658	880,347

For the purpose of the cash flow statement, cash and cash equivalent consist of cash in hand & at bank, net of outstanding bank overdraft as shown above.

The notes form an integral part of these interim financial statements.

8 Union Assurance PLC | Condensed Interim Financial Statements For The Three Months Ended 31 March 2024

LIFE INSURANCE FUND

STATEMENT OF FINANCIAL POSITION

As at	31.03.2024	31.12.2023
Note	Rs. '000	Rs. '000

Assets

Intangible assets

569,933

590,092

Property, plant and equipment		3,007,575	3,006,118
Right of use assets		401,343	418,566
Financial investments		70,347,899	68,817,082
Loans to life policyholders		2,425,337	2,368,021
Reinsurance receivable		429,494	447,558
Premiums receivable		881,186	1,051,444
Receivables and other assets		1,312,231	548,716
Cash in hand and at bank		897,118	830,554
Total assets		80,272,116	78,078,151
Reserves and liabilities
Reserves
Available for sale reserve		3,196,374	2,736,857
Revaluation reserve		2,087,235	2,087,235
Other reserves		(17,655)	(17,655)
Total reserves		5,265,954	4,806,437
Liabilities
Insurance contract liabilities	11	68,784,203	65,043,384
Insurance contract liabilities - Unit Linked		726,663	718,692
Lease liabilities		406,965	422,540
Employee benefit liabilities		193,158	190,578
Reinsurance payables		317,748	365,027
Other liabilities		4,502,481	6,408,933
Bank overdraft		74,944	122,560
Total liabilities		75,006,162	73,271,714
Total reserves and liabilities		80,272,116	78,078,151

Condensed Interim Financial Statements For The Three Months Ended 31 March 2024 | Union Assurance PLC

9

NOTES TO THE FINANCIAL

STATEMENTS

1 Reporting Entity

Union Assurance PLC ('the Company') is a public limited liability company incorporated and domiciled in Sri Lanka and the ordinary shares of the Company are listed on the Colombo Stock Exchange. The registered office and principal place of business of the Company is located at No. 20, St. Michael's Road, Colombo 03.

The Company's controlling entity and ultimate parent undertaking is John Keells Holdings PLC which is incorporated in Sri Lanka.

2 Approval of Financial Statements

The interim financial statements for the three months ended 31 March 2024 were authorised for issue by the Board of Directors on 14 May 2024.

3 Presentation of Financial Statements

The results of equity accounted investee of the Company, Fairfirst Insurance Limited has been presented in the financial statements in accordance with Sri Lanka Accounting Standard, LKAS 28 - Investments in Associates and Joint Ventures.

4 Basis of Preparation and Changes to the Company's Accounting Policies

1. Basis of Preparation
   The interim financial statements have been prepared in compliance with Sri Lanka Accounting Standard LKAS 34 - Interim Financial Reporting. These interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2023. Further, provisions of the Companies Act No.7 of 2007 have been considered in preparing the interim financial statements of the Company. The same accounting policies have been followed in preparation of these interim financial statements as stated in the Audited Financial Statements for the year ended 31 December 2023.
   The interim condensed financial statements are presented in Sri Lankan Rupees (LKR) and all values are rounded to the nearest thousand except when otherwise indicated.
2. Fair value measurement and related fair value disclosures
   The fair values of all the financial assets and financial liabilities recognised during the period were not materially different from the transaction prices at the date of initial recognition. All listed equity instruments were measured based on the market prices as at 31 December 2023 and classified as level 1 as per the fair value hierarchy. There were no transfers between Level 1 and Level 2 and no transfers into or out of Level 3 categories as per the fair value hierarchy during the reporting period.

5 SLFRS 9 - Financial Instruments and SLFRS 17 - Insurance Contracts

SLFRS 9 is effective for annual periods beginning on or after 1 January 2018. It replaces LKAS 39 - Financial Instruments: Recognition and Measurement.

Based on the proposed amendments to SLFRS 4 - Insurance contracts (to be replaced by SLFRS 17), the entities whose predominant activity is issuing insurance contracts are permitted to defer the full application of SLFRS 9 until the adoption of SLFRS 17, which is in financial period beginning on or after 1 January 2026.

The Company has used the above temporary exemption.

6 Gross Written Premium

For the period ended 31 March

Conventional

Unit linked

Total gross written premium

	2024	2023
	Rs. '000	Rs. '000
	4,884,864
	4,170,711
	2,363	816
	4,887,227
	4,171,527

10 Union Assurance PLC | Condensed Interim Financial Statements For The Three Months Ended 31 March 2024

NOTES TO THE FINANCIAL

STATEMENTS

7 Income Tax Expense

7.1 Current tax

Gains and profits from the Life Insurance Business are ascertained in terms of Section 67 of the Inland Revenue Act No. 24 of 2017 and other amendments in line with Inland Revenue (Amendment) Act No. 45 of 2022. As per this section, an income tax rate of 30% is applicable on gains and profits on the following;

Surplus distributed to shareholders from the Life insurance policyholders fund as certified by the actuary. Investment income of the shareholder fund less any expenses incurred in the production of such income.

Surplus distributed to a Life insurance policyholder who shares profits of an entity engaged in the business of life insurance.

Amount Recognised in the Profit or Loss

For the period ended 31 March

Current tax expense for the period

2024	2023
Rs. '000	Rs. '000
(172,595)
(160,729)
(172,595)
(160,729)

8 Profits From Life Insurance

No surplus transfer has been made from the life insurance fund to the Income Statement during the period under review.

9 Financial Investments

As at

Held to maturity financial assets (HTM)

Loans and receivables (L&R)

	31.03.2024	31.12.2023
	Rs. '000	Rs. '000
	41,710,830
	40,777,419
	11,682,971	10,849,760

Available for sale financial assets (AFS)	22,082,709	22,797,716
Financial assets at fair value through profit or loss (FVTPL)	8,124,823	8,994,878
Total financial investments	83,601,333	83,419,773

10 Restricted Regulatory Reserve

Based on the direction issued by the Insurance Regulatory Commission of Sri Lanka (IRCSL) dated 20 March 2018 and subsequent approval, the Company has transferred Rs. 3,382 million attributable to non - participating fund and non unit fund of unit linked business from life policyholder fund to life shareholder fund (SHF). The distribution of one - off surplus to shareholders, held as part of the Restricted Regulatory Reserve under equity in the statement of financial position is subject to meeting governance requirements stipulated by the IRCSL and can only be released upon receiving approval from the IRCSL. The one - off surplus in the SHF is represented by government debt securities as per the direction of the IRCSL.

As at	31.03.2024	31.12.2023
		Rs. '000	Rs. '000
Transfer of one - off surplus from non participating fund		3,393,900
	3,393,900
Transfer from shareholder fund for the one - off deficit created in the non-unit fund	of
unit linked life insurance contracts		(11,966)	(11,966)
		3,381,934	3,381,934