In an interview with Gavin D’ Rosairo, Chief Financial Officer of AIA Sri Lanka, about how the Company has remained financially strong and stable despite the ongoing COVID-19 pandemic, he states that AIA has many key attributes that allow the company to stay strong and prepared in any external environment, including pandemics. The first is the detailed level of preparedness and readiness. AIA Sri Lanka has always maintained business continuity plans and disaster recovery plans which are routinely tested for a variety of scenarios – these plans are quickly deployed and actively followed. Additionally, the three-year business plan incorporates a strong risk governance process with multiple stress test scenarios to validate the company’s financial strength in tough conditions. Stringent planning and stress testing to identify risks, their implications and mitigations keeps the company in sound shape. Therefore, even amidst a crisis, these solid processes help AIA to manage it, navigate it and remain very strong.
The preparedness also comes in the form of making investments and changes to facilitate effective business operations. Take the Finance function as an example. Over two years ago, AIA’s finance team embarked on a project with a vision to make Finance totally paperless in its operations. This project was executed with great success. In the context of COVID-19, AIA was able to immediately transition to the work-from-home operating model due to the digitalisation initiative that was executed at that time. This focus on digitalisation continues even at present with business intelligence and data projects at the core.
Another key factor is the strong balance sheet and financial resources. AIA Sri Lanka’s shareholders have maintained over LKR 20 billion in shareholders’ equity in the Company’s Balance Sheet. This provides the financial strength for the Company to weather the storms and continue to forge ahead with making investments in growth opportunities for the business. Notably, AIA has the strongest Capital Adequacy Ratio (CAR) in Sri Lanka’s insurance industry (488% in 2020 or 4 times more than required by regulator), making it the best positioned to withstand risks or face a crisis. This provides comfort and peace of mind to AIA’s policyholders that the Company remains strong and will honour all claims and obligations to policyholders well into the future. AIA’s financial strength is also supported by a prudent investment strategy to its high quality of investments. He also noted AIA’s track record of always exceeding expectations by paying higher than promised policyholder dividends for over 30 years.
Gavin draws out the critical importance of having a competent, committed and engaged team. The right people with the right expertise who are committed and engaged is critical, and especially in challenging environments. This is when the quality and commitment of the team is called to the fore. This is true for AIA Sri Lanka, and the Finance function is no exception. A team that understands the business is essential to build a financially strong and resilient business, and that too is true for the Finance team. Considering the current reality of work from home, with very little physical interaction, the team’s engagement and attitude play a vital role in the effective operations of the function and the Company.
Another factor is the Company’s protection-oriented propositions. He emphasizes that AIA identified the need for protection combined with long-term savings, with propositions covering retirement savings, pensions and health insurance. Especially in the current uncertain environment and crisis situations, the general populace’s awareness of the need for protection and life insurance coverage has reached a heightened level. This provides for a solid alignment with the propositions offered by AIA Sri Lanka and caters to this heightened need of the customers. Gavin noted that this enabled the Company to record growth despite the economic downturn. In addition, customers continued to pay their premiums and maintain their policies, demonstrating that the Company had the right propositions in the market that meets the needs of customers.
The final point Gavin made is on the long-term vision and fulfilling the Company’s purpose of helping Sri Lankans live Healthier, Longer, Better Lives. In this respect, Gavin says that the strategic focus has not changed. The Company has forged ahead by relentlessly executing the Company’s strategic initiatives with substantial investments being committed. This augurs well for the future of AIA Sri Lanka and sets the platform for sustained future growth. In the midst of the pandemic, AIA continued to make significant investments in digitalisation to enhance the service experience to customers.
In terms of how the current economic climate has impacted the Company and what assurance AIA can offer its customers in the future, Gavin points out that the Company has recorded growth amidst the challenging external environment. It has been supported by the strategies and initiatives deployed by the Company before and during the pandemic. He noted that the insurance sector overall too has recorded growth, and this is probably evidence of the heightened customer awareness for protection and coverage that was mentioned previously. As such, there hasn’t been any significant negative impact as a result of the pandemic in that regard.
As Gavin pointed out, “Life insurance is a very long-term business and companies need to prepare to pay on promises made well into the future. So, it all comes down to financial stability and balance sheet strength in the end. Towards this end, AIA Sri Lanka will continue to remain true to the core fundamentals of the financial discipline and prudent investment management that has held the Company in good stead. This will provide comfort and assurance to policyholders that when they need the Company to support them and fulfil its obligations towards them, that AIA Sri Lanka will be able to do so with more than adequate financial strength.”
Speaking on new financial practices that AIA has implemented during the pandemic to boost customer confidence, Gavin says that one of the things that the AIA’s distribution functions did during the pandemic was to actively engage with customers to educate them on topics such as financial wellness, the economic outlook, investments in general and managing personal finances. These were the topics that were top-most in individual’s minds, due to the uncertainty in the external environment. He mentions that AIA organised seminars and webinars for customers, agents, bancassurance partners and even internal teams, to provide guidance and share knowledge as many individuals encountered many questions during these times of uncertainty. Gavin has personally moderated and conducted a number of those webinars for a variety of people to help answer some of those questions from his vantage point of an economist and a practicing financial expert.