Sri Lanka Insurance Corp declares bonus to policyholders

Dec 05, 2009 (LBO) – Sri Lanka Insurance Corporation (SLIC) has declared a three billion rupee interim bonus to life policy holders, with another bonus likely to come before the end of the 2009 financial year, a senior official said.

Insurance companies pay bonuses to life insurance policy holders if the life insurance fund makes profits higher than forecast during the financial term.

SLIC has a life insurance fund valued at over 39 billion rupees, the largest in Sri Lanka.

“This in fact is only the interim bonus for the year 2009. Our customers can continue to expect further returns when the 2009 bonus is declared. The 2009 bonus is likely to be equal or higher than the interim bonus,” Nalaka Godahewa, managing director, SLIC said.

“Of course this will be very much dependent on the investments made in the financial instruments and the market conditions prevailing at the time.”

Insurance funds primarily invest in government debt instruments and are a captive financing source needed to plug budget deficits that often arise due to excessive state subsidies.

The lack of an active corporate bond market has also hurt insurance companies that need long term instruments, often over 15 years, to invest in.