Arpico

insurance
plc
B.L.R.Adithya 2022DFIN01
F.Akila 2022DFIN03
A.N.H.De Silva 2022DFIN09
Colombo university
Diploma in Finance
arpico Introduction

The purpose of this assignment is to

evaluate the financial performance and
position of Arpico Insurance PLC, a life
CSE company insurance company in Sri Lanka, for the
I nto d u c ti o n period from 2017 to 2021. The scope of
our analysis covers the key financial
indicators and ratios of the company,
such as revenue, net income, earnings per
share, return on equity, solvency ratio, etc.
We also compare these ratios with the
industry average and the competitors to
INVESTMENT GROUP assess the strengths and weaknesses of
PRESENTATION the company. The sources of data for our
analysis are the annual reports of Arpico
Insurance PLC and other relevant websites
that provide financial information and
statistics.
 1. Key financial indicators
Earning per share Net income Revenue

2. key financial ratios

Liquidity ratio Solvency ratio Efficiency ratio

Market ratio Profitability ratio

3. Measure of financial ratios

Profitability Growth

4. Financial ratio analysis strengths & weekness

Strength Weakness

CONTENTS
5. Financial ratio analysis oppertunities & threats
Oppertunities Threats

6. Our findings and reccomendations

Findings Recomendations

7. References
KEY FINANCIAL
INDICATORS
 arpico
Earning per share

Earning per share

2022 The amount of money earned
by each share of the companys
2021 stock.

2020

2019

2018

2017

2016

2015
1 2 3 4 5
 arpico
Net income

Net income
-2015
Net income Rs.316,000,000 Rs.279,000,000 Rs.1,030,000,000 Rs.1,036,000,000 Rs.839,000,000 The amount of money left
after deducting all expenses,
-2016
taxes and dividends.

-2017

-2018

-2019

-2020

-2021

-2022
arpico
Revenue

The amount of money

generated from selling
insurance policies and
investing premiums.
KEY FINANCIAL
RATIOS
 arpico
Liquidty ratio

Liquidity rati os
These ratios measure the ability of the
1.24
company to meet its short-term obligations.
One of the common liquidity ratios is the
1.22 current ratio, which is calculated by dividing
the current assets by the current liabilities. The
higher the current ratio, the more liquid the
1.2
company is.

1.18

1.16

1.14

1.12

1.1
1 2 3 4 5

Liquidity ratios
 arpico
Solvency ratio

These ratios measure the ability of the

Solvency rati os
company to meet its long-term
5
obligations and survive in the long run.
4.5 One of the common solvency ratios is the
solvency margin ratio, which is calculated
4
by dividing the available solvency margin
by the required solvency margin. The
3.5
higher the solvency margin ratio, the
3 more solvent the company is.

2.5

1.5

0.5

0
1 2 3 4 5

Solvency ratios
 arpico
Efficiency ratio

These ratios measure how well the

Effi ciency rati os
company uses its resources to generate
25.00%
revenue and profit. One of the common
efficiency ratios is the operating expense
ratio, which is calculated by dividing the
20.00%
operating expenses by the net premium
income. The lower the operating expense
ratio, the more efficient the company is.
15.00%

10.00%

5.00%

0.00%
1 2 3 4 5

Efficiency ratios
 arpico
Profitability ratio

These ratios measure how profitable the

Profi tability rati os
company is in relation to its revenue,
17.50%
assets or equity. One of the common
profitability ratios is the return on equity

17.00% ratio, which is calculated by dividing the

net income by the total equity. The
higher the return on equity ratio, the
16.50% more profitable the company is for its
shareholders.

16.00%

15.50%

15.00%

14.50%
1 2 3 4 5

Profitability ratios
 arpico
Market value ratio

These ratios measure how the market

Market value rati os values the company and its shares. One
12 of the common market ratios is the price-
to-earnings ratio, which is calculated by
dividing the market price per share by the
10
earnings per share. The higher the price-
to-earnings ratio, the more the market

8
expects the company to grow in the
future.

0
1 2 3 4 5

Market value ratios

MEASURE FINANCIAL
RATIOS
arpico
Profitability
Financial ratios are numbers that
show the state of a company’s
finances by comparing different
figures in its financial statements

There are many types of

financial ratios, such as
liquidity, leverage,
efficiency, profitability and
market value ratios

They can help measure a

company’s performance
against other firms or the
industry average

We can see that the company’s profitability ratios (ROE, ROA and EPS)
have declined from 2017 to 2020, while its growth ratio (GWP) turned
negative in 2020 due to the impact of the COVID-19 pandemic. We can
also compare these ratios with the industry averages or other insurance
companies to get a better sense of how Arpico Insurance PLC is
performing in relation to the market.
arpico

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arpico
Growth

You can see that the company’s growth

ratios (GWP, NP, II and TA) have decreased
from 2017 to 2020, except for the total
assets growth which increased in 2020
despite the negative impact of the COVID-19
pandemic. You can also compare these ratios
with the industry averages or other
insurance companies to get a better sense of
how Arpico Insurance PLC is growing in
relation to the market.
FINANCIAL
RATIO ANALYSIS
STRENGTHS AND
WEEKNESS
 arpico
Strength

strengths
• The company has a high return on equity (ROE) weakness
compared to the industry average of 6.5%, which
means it is generating more profits for its
shareholders. Arpico

• The company has a high gross written premium

growth (GWP) compared to the industry average
of 9.8%, which means it is expanding its market
share and customer base.

• The company has a high investment income

growth (II) compared to the industry average of
7.2%, which means it is earning more income from
its investments.
 arpico
Weakness

strengths
• The company has a low return on assets (ROA) weakness
compared to the industry average of 4.2%, which
means it is not using its assets efficiently to
generate profits. Arpico

• The company has a low earnings per share (EPS)

compared to the industry average of Rs. 4.6, which
means it is not generating enough earnings for its
shareholders.

• The company has a negative net premium growth

(NP) in 2020, which means it is losing customers or
reducing its premiums.
FINANCIAL
RATIO ANALYSIS
OPPERTUNITIES AND
THREATS
 arpico Oppurtunities & Threats
Opportunities:

• The company can leverage its high gross written premium growth (GWP) to
increase its market share and customer loyalty in the insurance industry.

• The company can use its high investment income growth (II) to diversify its
portfolio and invest in more profitable and less risky assets.

• The company can improve its return on assets (ROA) by optimizing its asset
utilization and reducing its operating expenses.

Threats:

• The company faces the risk of losing customers or reducing its premiums due to
the negative net premium growth (NP) in 2020, which may indicate a decline in
customer satisfaction or demand.

• The company faces the risk of lower earnings per share (EPS) due to the lower
return on equity (ROE) and profit before tax (PBT) in 2020, which may affect its
shareholder value and dividend policy.

• The company faces the risk of external factors such as regulatory changes,
market competition, economic downturns, natural disasters and pandemics that
may affect its financial performance and stability.
IMPROVE FINANCIAL
PERFONACE &
POSITION
 arpico

• The company can increase its customer retention and acquisition

by offering more competitive and innovative products and
services, enhancing its customer service and loyalty programs,
and expanding its distribution channels.

• The company can boost its earnings and profitability by

increasing its operational efficiency, reducing its costs and
expenses, improving its pricing and underwriting strategies, and
managing its risks effectively.

• The company can strengthen its financial position and stability

by maintaining a healthy liquidity and solvency ratio, optimizing
its capital structure, increasing its shareholder value and
dividend payout, and complying with the regulatory
requirements.
OUR FINDINGS &
RECOMMENDATIONS
 arpico
Our reccomendations
1. The company can increase its
customer retention and acquisition by
offering more competitive and
innovative products and services,
enhancing its customer service and
loyalty programs, and expanding its
distribution channels.
2. The company can boost its earnings
and profitability by increasing its
operational efficiency, reducing its
costs and expenses, improving its
pricing and underwriting strategies,
and managing its risks effectively.
3. The company can strengthen its
financial position and stability by
maintaining a healthy liquidity and
solvency ratio, optimizing its capital
structure, increasing its shareholder
value and dividend payout, and
complying with the regulatory
requirements.
Main findings
1. The company has a high return
on equity (ROE), gross written
premium growth (GWP) and
investment income growth (II),
which indicate its strong
profitability, market share and
income generation.
2. The company has a low return on
assets (ROA) and earnings per
share (EPS), which indicate its low
asset utilization and shareholder
value.
3. The company has a negative net
premium growth (NP) in 2020,
Keywords which indicates a decline in
customer satisfaction or demand.
4. The company faces external risks
such as regulatory changes,
market competition, economic
downturns, natural disasters and
pandemics that may affect its
financial performance and
stability.
REFERENCES
 References
Add title
 Wise. (2021, October 28). Wise financial performance.
https://wise.com/us/blog/financial-performance
 Mazars. (n.d.). Transform financial performance and
your business. Retrieved August 25, 2023, from
https://www.mazars.com/Home/Your-business/Privately
-owned-businesses/Insights/Transform-financial-
performance-and-your-business
 Corporate Finance Institute. (n.d.). Financial
performance. Retrieved August 25, 2023, from
https://corporatefinanceinstitute.com/resources/accoun
ting/financial-performance/
 ARPICO Insurance PLC. (n.d.). Financial information.
Retrieved August 25, 2023, from
https://www.arpicoinsurance.com/financial-
information/
 Market Business News. (n.d.). Financial ratios. Retrieved
August 25, 2023, from
https://marketbusinessnews.com/financial-glossary/fina
ncial-ratios/
arpico

C B A A+

GROUP TARGET
arpico

END
25.08.2023
 arpicoe

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