"We are proud to have been the anchor investor in Sri Lanka’s first-ever listed green bond, issued by DFCC Bank PLC, with an investment of Rs. 2.0 billion."

BUSINESS CLIMATE – GLOBAL AND LOCAL PERSPECTIVES

In 2024, the global economy exhibited modest growth, reflecting stabilisation after previous years of volatility. The International Monetary Fund (IMF) projected a global growth rate of 3.2% for 2024, aligning with earlier forecasts. This stabilisation, however, remained below the pre-pandemic average of 3.7% observed between 2000 and 2019.

Inflationary pressures persisted globally, complicating monetary policy normalisation efforts. Global debt reached $318 trillion by end 2024, with the global debt-to-GDP ratio reaching 328%. This surge heightened concerns about fiscal sustainability and the potential for bond market volatility. Geopolitical tensions and potential trade policy changes continued to pose risks to the global economic outlook. Business leaders expressed concerns about these uncertainties, which could impact investment decisions and supply chain dynamics in the coming years.

The year was a historic one for Sri Lanka. Two major elections were held, Presidential and Parliamentary, the election results marking a departure from traditional politics, resonating with a populace seeking transparency and economic reforms. The decisive mandate enabled the new administration to implement its reform agenda effectively, further solidifying political stability in the country

Sri Lanka's economy showcased notable resilience and recovery, with key indicators reflecting a positive turnaround. Real GDP saw steady growth during the first three quarters, driven by a revival in the industrial sector and a strong rebound in tourismrelated services, marking a significant recovery from the economic downturn of 2022. Inflationary pressures eased considerably over the year, with headline inflation dipping into negative territory at -1.7% year-on-year, a sharp contrast to the high inflationary trends of previous years. The dis-inflationary path continued through 2024.

In response to the more stable inflation environment, the Central Bank of Sri Lanka (CBSL) implemented a unified policy interest rate of 8%, aimed at encouraging private sector credit expansion and further supporting economic growth. The Sri Lankan Rupee remained relatively stable against major currencies, supported by an increase in Foreign Exchange reserves. This was largely driven by higher inflows from tourism earnings, worker remittances, and continued financial assistance from the IMF

Meanwhile, drawing strength from the rebounding economic activities, Sri Lanka's insurance sector also demonstrated resilience. According to the Insurance Regulatory Commission of Sri Lanka (IRCSL), pre-tax profitability and Gross Written Premium (GWP) increased by 6.22% and 20.39% respectively over 2023. A comprehensive review by the IRCSL covering the period from 2019 to the third quarter of 2024 highlighted the industry's stability amidst economic downturns, including the COVID-19 pandemic and the 2022 financial crisis. The sector maintained its commitment to protecting policyholders and ensuring business continuity during these challenging times.

STEADY PROGRESS IN DELIVERING VALUE

Gross Written Premiums (GWP) for the year witnessed a commendable year-on-year (YoY) growth of 11.16%, reaching Rs. 37.1 Bn, reflecting the trust and confidence placed in us by our policyholders. The continued YoY growth in GWP reaffirms the sustainability of our business model, competitive edge and ability to capture market opportunities effectively.

Further underscoring our financial strength, our Risk-Based Capital Adequacy Ratio was recorded at 448%, significantly surpassing the regulatory minimum requirement of 120%. This achievement highlights the Company’s strong capital position and financial resilience in a dynamic environment

Pre-tax profitability stood at Rs. 10.05 Bn, an impressive increase of 19.10% compared to 2023. Our proactive revenue optimisation strategies, cost rationalisation efforts, and prudent investment decisions ensured that we continued to generate solid returns for our shareholders, maintaining the Company’s financial stability and long-term sustainability. Accordingly, we posted a 11.64% Return On Equity and Rs. 141.43 in Earning Per Share from 10.67% and Rs. 116.04 in 2023 respectively. The Company proposed a final dividend of Rs. 17.70 per share for the financial year 2024, subject to shareholder approval at the AGM. A comprehensive analysis of our financial performance, including key drivers and strategic responses, is provided in the Chief Executive Officer’s Review on pages 44 to 48.

We firmly believe that our employees are the driving force behind our success. In 2024, we reinforced our commitment to nurturing our workforce by investing Rs.3 billion in employee expenses, ensuring competitive remuneration and benefits. Our focus on continuous learning remained steadfast, with training and competency-based capacity-building initiatives designed to equip our employees with the skills needed to execute our strategic plans effectively. Beyond professional growth, we extended our care to employees’ and their families, offering various benefits, counseling services, fostering a holistic support system. Through these initiatives, we continue to create a work environment that encourages personal and professional growth, aligning our people’s aspirations with the Company’s long-term vision.

Our strategy is deeply rooted in customer-centricity, driving us to implement several initiatives that enhance service excellence. One key issue we identified was the growing number of abandoned policies, where customers lost touch with us after many years. Additionally, there were multiple instances where policyholders lacked valid bank accounts, often due to migration or other life changes, resulting in significant unclaimed benefits. In our commitment to ensuring that policyholders receive what is rightfully theirs, we launched an AI-powered customer tracking and intelligence initiative - a collaboration between our Customer Service and Business Intelligence units. This enables us to reconnect with policyholders, ensuring they can access the benefits they are entitled to.

Our customer satisfaction scores improved in 2024, reflecting the excellence of our service levels. As part of our ongoing efforts to enhance the customer experience, we have a well-defined blueprint that maps the customer journey, ensuring seamless interactions at every touchpoint. Our team is equipped with service excellence training and digital capabilities, allowing us to continuously refine convenience based on customer feedback.

Our commitment to community empowerment remained steadfast throughout the year. We conducted 12 health camps under the Ceylinco Life Waidya hamuwa, extending essential medical support to 2,609 individuals, reinforcing our dedication to enhancing public well-being. In addition, we continued our long-standing support for the National healthcare sector by maintaining five High Dependency Units, ensuring critical care facilities for those in need. Our contributions also included vital donations, such as oxygen distribution systems, further strengthening the country’s healthcare infrastructure and enabling better patient outcomes.

SUPPORTING SRI LANKA’S SUSTAINABILITY JOURNEY

We are proud to have been the anchor investor in Sri Lanka’s first-ever listed green bond, issued by DFCC Bank PLC, with an investment of Rs. 2.0 billion. We hope this initiative inspires more issuers and investors to take bold steps in financing environmental and social advancements. The private sector plays a crucial role in bridging the funding gap for Sri Lanka’s transition to a greener economy, and we remain committed to driving this momentum forward.

Details of Ceylinco Life’s numerous other initiatives advancing environmental stewardship are found in the Chief Executive Officer’s Message and Environmental Sustainability Pillar in pages 153 to 166 respectively.

TRUST, TRANSPARENCY, AND GOOD GOVERNANCE

Consistent with its longstanding commitment to strong governance, the Board of Directors of CLI diligently fulfilled its responsibilities throughout the financial year 2024, adhering fully to CLI’s Articles of Association and applicable regulatory frameworks. Furthermore, in terms of the IRCSL Direction No. 02 of 2022, the Board adopted Section 9 of the Listing Rules on Corporate Governance issued by the Colombo Stock Exchange, reinforcing our commitment to best practices. As a result, CLI devised and implemented 15 policies, 11 of which were established during the year, while the remaining 4 established in previous years were reviewed in line with the latest regulations, enhancing Board oversight and providing clear guidance on these performance aspects. This proactive approach has strengthened our governance framework, enhancing transparency, accountability, and our ability to safeguard shareholder interests while ensuring prudent stewardship of their investments. Dr. Harsha Cabral PC acts as the Senior Independent Director supporting the Chairman in maintaining an effective governance framework.

The Board provided oversight of the Strategic Management Team’s activities, ensuring accountability and alignment with the Company’s strategic objectives. Meeting five times during the year, the Board focused on key areas, including the impact of the evolving external environment on Company performance, strategy, risk management, compliance, governance, data protection, antibribery, anti-money laundering and stakeholder interests. The Board’s diverse expertise across multiple disciplines, viz., accounting, finance, strategic management, risk management, investment and banking, IT, marketing, HR, medicine, law, engineering, and architecture - enhanced its effectiveness in working collaboratively with management. Additionally, the Board invested considerable effort in succession planning for both the Strategic Management Team and its own leadership.

The Board Sub-Committees played a vital role in supporting the Board’s oversight responsibilities, effectively delivering on their respective mandates. Covering eight core governance areas, the SubCommittees were further strengthened with the establishment of dedicated ESG Sub-Committees during the year. This addition affirms our commitment to advancing ESG performance while ensuring full compliance with emerging regulatory requirements in the country.

Furthermore, enabling us to develop and deliver the most effective insurance solutions, the Board and the Management benefitted from the guidance of an independent advisor with extensive expertise in the insurance industry. This expert perspective enhances our strategic decision-making, ensuring that our solutions remain innovative, customer-centric, and aligned with evolving industry standards and best practices.

IT AND DATA GOVERNANCE

The IT department underwent a structural reorganisation, introducing several new designations to enhance agility and responsiveness to emerging technological opportunities. As part of our digital transformation, we initiated several key IT projects, including the sourcing of a new Life Insurance System, which, once implemented, will significantly enhance our performance capabilities.

In the area of data governance, we conducted a comprehensive gap analysis of our data and IT policies with the expertise of an external consultant. This assessment led to the launch of several enhancement initiatives, including the appointment of a Data Protection Officer, who reports to the Chief Risk Officer. This strengthens CLI’s risk management and governance framework, ensuring robust data security and compliance.

APPRECIATIONS

As we reflect on a year of resilience and progress, I, along with the Board of Directors, extend my sincere appreciation to our Managing Director/ CEO, Mr. Thushara Ranasinghe, and the Strategic Management Team for their unwavering leadership and commitment in steering CLI through an evolving landscape. I also express my gratitude to our employees and the sales force across the country, whose dedication and hard work continue to drive our mission of delivering protection and financial security to our policyholders.

Our heartfelt appreciation goes out to our valued policyholders, whose trust and confidence inspire us to continuously raise the bar in service excellence. We are equally grateful to our parent company, Ceylinco Holdings PLC, and our subsidiaries, whose collective strength enhances the versatility, growth and acceptance of the Ceylinco Life brand in Sri Lanka.

Furthermore, I extend my sincere thanks to the Insurance Regulatory Commission of Sri Lanka, our reinsurers, advisors, consulting firms, and all other stakeholders for their invaluable contributions to our journey.

A special note of gratitude is also due to Mr. H M Hennayake Bandara who resigned from the Board with effect from 31st December 2024. We deeply appreciate his dedicated service as a Director and the valuable insights he brought to the Company during his tenure. We wish him the very best with his future endeavours.

BUILDING ON MOMENTUM FOR A PROMISING FUTURE

Sri Lanka’s economic prospects for 2025 appear positive, with the Asian Development Bank forecasting a GDP expansion of 2.8% and inflation remaining under control at 5.5%. The effective execution of the $2.9 billion IMF assistance programme has played a crucial role in stabilising the economy, with the recent approval of the 3rd review unlocking an additional $334 million in funding. Meanwhile, the tourism industry - a key driver of Foreign Exchange continues to rebound, reinforcing economic momentum and supporting broader growth in the years ahead. A key pledge of the incumbent political administration has been the eradication of corruption - an outcome we eagerly anticipate, as eliminating corruption has the potential to resolve many of the country’s longstanding challenges.

As the economy gradually strengthens, citizens have renewed their confidence in shaping their futures, making bold decisions that pave the way for prosperity. As they take these steps forward, we remain committed to supporting them by helping derisk their lives and empowering them to build a more secure and promising future.

With a solid foundation in place, we are well-positioned to build on our momentum. Backed by a robust strategy, a highly skilled team, enhanced process capabilities, and continuous innovation, we are confident in our ability to strengthen our legacy of empowerment and resilience for generations to come.

R. Renganathan

Executive Chairman

20 February 2025

Colombo