Hefty tax reversal boosts Union Assurance September earnings

Ahefty tax reversal on account of deferred tax asset boosted Union Assurance PLC’S bottom line for the quarter ended in September but the general business also performed better than a year earlier with both gross premiums and operating profits rising fast.

Union Assurance PLC reported a gross written premium of Rs.2.73 billion during the three months to end-september, an increase of 4.0 percent over the same period last year.

The net investment incomes also rose by 7.0 percent yearon-year (YOY) to Rs.973.7 million during the three months.

Meanwhile, the company saw a sharp increase in the net claims and benefits paid during the quarter.

Such benefits and claims rose by 40 percent YOY to Rs.1.04 billion, from Rs.745 million in the year earlier period.

Despite the higher claims paid, the profit from operations rose sharply to Rs.181.4 million, from Rs.48.7 million in the corresponding period last year, as the change in the contract liabilities in the life fund fell to Rs.493.4 million, from Rs.1.4 billion a year earlier.

Union Assurance, the subsidiary of the John Keells group, reported earnings of Rs.27.79 a share or Rs.1.64 billion in total earnings for the quarter, compared to Rs.1.55 a share or Rs.91.4 million earnings in the same period last year.

The earnings were boosted by a hefty tax reversal on account of deferred tax asset during the September quarter.

“…during the quarter ended September 30, 2018, the company recognized a deferred tax asset amounting to Rs.1.532 billion, arising from brought forward tax losses as at December 31, 2017, after assessing the availability of future taxable profits for utilization,” the company said in its interim financial results.

The company had a life insurance fund of Rs.31.3 billion as of end-september.

Meanwhile, for the nine months ended on September 30, 2018, Union Assurance reported earnings of Rs.38.04 a share or Rs.2.24 billion in total, compared to Rs.4.52 a share or Rs.266.6 million in the same period last year.

The gross written premiums were Rs.7.9 billion, up 9.0 percent YOY and the company paid net claims and benefits of Rs.2.6 billion, sharply up from Rs.1.7 billion in the earlier period.

John Keells Holdings has a 90 percent stake in Union Assurance PLC.