When Nuwan Withanage joined Softlogic Life a decade ago, he had a clear objective; to transcend beyond traditional financial management practices towards driving Softlogic Life into becoming a true industry force. Today, with Nuwan leading the Finance function as the Chief Financial Officer, Softlogic Life has come a long way by setting new benchmarks for governance and transparency in financial performance and financial reporting in Sri Lanka. His strategic foresight and leadership have propelled the Company to new heights and positioned it as a well governed financial powerhouse with sustained growth in the insurance sector.
A transformative period
Nuwan describes his tenure at Softlogic Life a transformative period where he took on responsibilities beyond the CFO capacity, leading strategic formulation, exploring overseas expansion, and actively participating in the company’s general management and strategy formulation. This allowed Nuwan to contribute to the company’s overall strategy and operations.
During this transformative period, Softlogic Life has achieved remarkable milestones setting new standards for transparency and financial reporting in Sri Lanka, garnering over 70 awards, including four overall excellence accolades from CA Sri Lanka and CMA Sri Lanka for financial reporting. Over the past nine years, the company has recorded an impressive 28% CAGR in revenue, surpassing the industry average of 14%, resulting in a substantial increase in market share from 3% to 18%. Furthermore, Softlogic Life ascended to the position of the second-largest insurer in Sri Lanka from 5th position in the market, becoming the market leader in the health insurance industry. Nuwan opines that its sustained over 25% ROE (Return On Equity) over the past five years is a testament to Softlogic Life’s commitment to long-term value creation.
Optimizing capital for sustainable growth
In the insurance industry, maintaining a robust capital position is crucial, considering the long-term commitments inherent in the business. As per Nuwan, Softlogic Life has realized this well. The company has adhered to a meticulous approach to ensure our capital structure aligns with the dynamic needs of our business. This commitment to a strong capital foundation serves as a buffer against unforeseen risks and economic fluctuations, providing Softlogic Life with the resilience needed to navigate the uncertainties inherent in the insurance landscape.
For example, Softlogic Life has implemented the Risk Based Capital (RBC) Framework as per Insurance regulations, which is an indicator of the quality of the equity of the company. This valuation regime makes a fundamental shift away from the current philosophy, which is built upon risk based approach which emphasize greater transparency and provides a more accurate picture of the insurer’s financial position based on the nature of the business model. The company’s Capital Adequacy Ratio (CAR) stands at 367% as of 31st December 2023, which is well above the regulatory minimum requirement of 120%. Nuwan says this reflects Softlogic Life’s healthy and sustainable operations and its propensity to move ahead at a rapid pace.
Additionally, Softlogic Life entered into two strategic transactions amounting to USD 30 million to improve the capital position in year 2020 where the first transaction was a Tier 11 subordinated debt transaction with the Finnish Fund for Industrial Cooperation Ltd (Finnfund) and the Norwegian Investment Fund for Developing Countries (Norfund) for USD 15 million. The second transaction was a financial reinsurance arrangement with Messrs. Munich Re – Singapore for another USD 15 million to provide funding for future business development objectives of the Company
Effective financial reporting: A pillar of trust
While centering its strategies to strengthen its financial position, Softlogic Life puts heavy focus on effective financial reporting. For the company, it goes beyond regulatory requirements; it is a cornerstone of transparency, accountability, and stakeholder trust. Softlogic Life’s understanding of effective financial reporting goes beyond the mere presentation of numbers; it encompasses a comprehensive approach that contributes to the success and sustainability of the business. Nuwan also emphasizes that providing accurate and reliable information fosters trust among investors, policyholders, and regulatory authorities.
The company’s commitment to innovation in financial reporting is evident in its embrace of technology. Softlogic Life was the first company in Asia and Sri Lanka to obtain external assurance on integrated reporting, and its innovative initiatives, such as the ‘video version of Annual Report’ which is another Sri Lanka’s first initiative and ‘Generate Your Report,’ showcase a commitment to delivering meaningful financial insights in an ever-changing digital world. This commitment to innovation not only improves the efficiency of its reporting processes but also ensures that Softlogic Life stay ahead in delivering meaningful financial insights to our stakeholders.
In the current economic context in Sri Lanka too, effective financial reporting has become a crucial tool for businesses. Nuwan highlights that Softlogic Life’s proactive and innovative approaches ensure that annual reports meet the highest standards of integrated reporting. These efforts reflect the company’s dedication to transparency, accountability, governance, and sustainability.
ESG integration is a strategic imperative
Financial best practices and innovations have also led a path towards incorporating Environmental, Social, and Governance (ESG) principles into its strategies. Beyond regulatory compliance, Nuwan believes that this commitment has positively impacted the company’s brand reputation, attracting socially conscious investors and customers. The alignment of ESG principles with financial strategies reinforces the interconnectedness of responsible business practices and long-term financial resilience.
Softlogic Life’s ongoing journey in this realm is a testament to the company’s belief that responsible financial strategies are integral to both the success of its business and the well-being of the broader community they serve.
Charting the future of finance
When asked about emerging trends that are poised to reshape the finance landscape in Sri Lanka. Nuwan said accelerated adoption of digital finance, fintech solutions, and the rise of digital payments are trends Softlogic Life is strategically positioned to leverage. The company recognizes the potential of technologies like Artificial Intelligence, Blockchain, and Machine Learning, aligning its products and services with evolving customer preferences. As the financial sector undergoes regulatory advancements and embraces blockchain technology, Softlogic Life remains vigilant, adapting to changes and contributing insights to foster a balanced and progressive financial ecosystem.
Nuwan’s role at Softlogic Life exemplifies a commitment to innovation, transparency, and responsible financial practices, positioning the company as a trailblazer in the ever-evolving landscape of financial services in Sri Lanka.