MGT505

Program title : MBA /PGD Module title : Strategic Management Module code : MGT505 CONTINUOUS ASSESSMENT Strategic Plan For Softlogic Life Insurance PLC Student Name: Student ID:

Table of Contents List of tables 1 List of figures 2 1 Overview of the company 3 1.1 Key financial highlights 4 1.2 Product portfolio 4 1.3 Customer base and key customer segments 5 2 Micro and Macro analysis of the company 6 3 Competitive analysis and SWOT analysis 15 4 Strategic priorities 21 5 References 24 List of tables Table 1.1- Key financial highlights ............................................................................................ 4 Table 1.2- Product portfolio ....................................................................................................... 5 Table 2.1- Stakeholder analysis ................................................................................................ 10 Table 2.2 - PESTEL analysis .................................................................................................... 14 Table 3.1 – Porter’s five forces analysis .................................................................................. 18 Table 3.2 – SWOT analysis ...................................................................................................... 20 Table 4.1 – The strategic priorities of the company ................................................................. 23 1 | P a g e

1 Overview of the company Softlogic Life Insurance PLC is the fastest mounting life insurer within the insurance industry in Sri Lanka. It has been commenced the business operations in the year of 2000 under the name of Asian Alliance Insurance and in the year of 2005, it has been the Softlogic Holdings, which is a reputed diversified conglomerate operating within Sri Lanka. Currently, Softlogic Life Insurance PLC is operating as a subsidiary of Softlogic Capital PLC under Softlogic Holdings which owning 51.7% [CITATION Sof20 \l 1033 ]. Figure 1.1 -Current ownership structure Source: [CITATION Sof20 \l 1033 ] With the rebranding of Asian Alliance in 2016 under the name of Softlogic Life, the business has started to recognize as an innovative and creative brand within the insurance industry of the country while making the company different from its competitors. Under the key objective of improving the quality of lives of the Sri Lankans, Softlogic Life provides a wide range of defense solutions for its customers while introducing number of initiatives for the industry. The gross written premium income and the market share of Softlogic Life over the past five years has reported a significant growth and making the company the fast-growing insurer within the current industry. The main strategy of the company is focused on becoming the primary insurer and to increase the insurance penetration within Sri Lanka. Currently Softlogic Life is at the 4th place within the market [CITATION Sof20 \l 1033 ]. Vision To transform insurance within Sri Lanka by world-class innovations and bring extraordinary stakeholder value. Mission To foster the well-being of people to allow them to enjoy the life today. 3 | P a g e

1.1 Key financial highlights The following financial highlights of the company provides that the performance of the company has established the business to be success within the insurance industry of Sri Lanka. 2019 2018 2017 Strengths of the company Gross written premium (Rs. Mn) 12,531 10,006 7,531 Investment and other income (Rs. Mn) 1,584 953 1,069 Stability of the company Life insurance fund (Rs. Mn) 8,683 7,556 6,090 Total financial investments (Rs. Mn) 15,136 12,226 10,134 Profit before tax (Rs. Mn) 2,604 1,095 1,107 Total assets (Rs. Mn) 20,683 17,333 12,478 Total employee base 805 821 736 Total branches owned 99 98 92 Total field staff force 2772 2300 2247 Table 1.1- Key financial highlights Source: [ CITATION Sof20 \l 1033 ] 1.2 Product portfolio Softlogic Life Insurance PLC offers a range of products for the customers to resolve the various life insurance requirements of the customers covering both individual and corporate customers. Protection  Strategic life plan  Family plan  Child plan  Softlogic life premium relief plan Universal Life  Softlogic Life universal plan  Softlogic life corporate pension plan  Softlogic life universal savings plus plan Health  Softlogic life healthcare plan  Softlogic life good health series 4 | P a g e

2 Micro and Macro analysis of the company The microenvironment of an organization is consisted with the parties who directly involved and connected to the organization and they can affect the capabilities of the company to serve the market [ CITATION RAb17 \l 1033 ]. Mainly the microenvironmental forces can include government, suppliers, employees, customers, competitors and the community and they constitute the key stakeholders of any organization. The primary stakeholders of Softlogic Life can be categorized using the Mendelow’s matrix of stakeholder analysis, prioritizing the of stakeholders based on their power and the interests. According to the Mendelow’s matrix, the investors and the customers are the main stakeholders of Softlogic Life who can get affected significantly by business operations and who has the greatest potential to make a considerable impact on the business as well. Therefore, based on the different levels of power and interests within the stakeholders, the organization must use various strategies to deal with different stakeholders. High Keep satisfied Key players Government and other relevant regulators Investors & customers Power Minimal effort Keep informed Suppliers, Environment & community Employees Low Low Interest Low Figure 2.2 –Mendelow's matrix of stakeholder analysis for Softlogic Source: Author developed The following table has identified the role and the expectations of each key stakeholder of Softlogic Life and it shows how the organization will respond each stakeholder expectations to minimize the impact that they can make for the company and to reduce the effect that the company can make on them. 6 | P a g e

Stakeholder Role Interests Response Investors Investors are the owners of the company who provide the required financial capital to continue the organizational operations. Their main objective is to receive adequate returns for the money invested to the organization. Sustainable improvement within the ROI Developing suitable strategies to produce growth in terms of the revenue and the shareholder's equity. Protect and provide the rights of the key stakeholders Establishing a strong corporate governance framework within the organization. Ensuring the acceptable and timely communication of company progress. Conducting of shareholder meetings, media releases, press conferences and publishing detailed annual Report on timely manner. Customers To have quality and reliable products and services from the company. Availability of company products and services covering the whole island. Expansion of the distribution channels (Agency, Alternate, Micro etc.) and the company branch network to ensure the availability of products to all the customer segments in the country. High level of convenience Introduction of an online payment systems, company mobile application etc. to allow the customers to purchase the insurance policies. Highly satisfied customer services Appointment of separate team of employees to carry out continuous evaluation on the level of customer convenience and call centre operations to provide solutions for the customer issues & complaints. Fast settlement of claims Introduction of one day claim settlement process to ensure fast settlement of claims of the customers. Timely introduction of new products and services to meet the trending requirements of the customers Launching of new products and services on timely basis to meet new requirements of the customers (postal life insurance policies, products for low income segments, Softlogic life online plan for young people who pursue simple and affordable insurance policies etc.). Employees Provide required High job security Following proper HR 7 | P a g e

continuous operations of the company systems to ensure fair selection of the suppliers and business partners business partners are selected under a fair policy. Timely settlement of the due payments Implementation of a well- defined payment handling system to settle payments in a timely manner. Community The opinion of the wider community about the company and its processes is important to ensure better recognition and survival High level of involvement within CSR activities to provide value to the society and to establish better recognition Undertaking CSR programs annually to ensure wellbeing of the wider community (WIN – youth empowerment program, university scholarship program etc.). Creation of more employment opportunities Recruitment of more employees for the company on annual basis ensuring that the company a well-diversified workforce for the company. Environment All living and non- living beings which provides resources to last business operations smoothly Lessening the negative impacts of business operations on the natural environment Recycling of the used papers within the company and introduction of paper-less business operations within the company. Table 2.3- Stakeholder analysis Source: [ CITATION Sof20 \l 1033 ] Macroenvironment analysis involves analyzing the wider external environment of an organization to understand different effects from different elements. Macroenvironment comprised of a set of elements within the wider society that might affect the industries and their existing companies including the political, economic, socio-cultural, technological, government policies and the demographic environments [ CITATION Ele13 \l 1033 ]. Macro Environment Factor Implications O/T Impact Economic As the gross domestic production of the economy increases, it results with new customers within the industries along with the premium upgradations which might increase the insurance penetration. O H When the per capita income of the customers gets O H 9 | P a g e

improved, the individuals will have more money to spend and demand for products and services like insurance and investments will be increased. The individuals can lose their ways of earning money and they will tend to spend money only for the essential products and services. This will result in more one-time customers declining the company demand. T M The increasing inflation rate in the country creates negative situations for the life insurance companies due to the reduction of real disposable income of customers. O M Social & Cultural Since the life expectancy of people get reduced, people will live for less time and it will automatically reduce demand for insurance products and services. O H Possibilities of sudden increase in the number of claims payable for the policyholders can increase various risks. T H The growing ageing population will generate more demand for the insurance products and services like health, pension, retirement etc. O H The increasing savings ratio will generate more demand for the insurance product solutions to cater the different savings requirements like short term and long-term saving product solutions. O H With the increased digital savvy generation, more demand will be created for the digital savvy insurance products. O H With the growing population and the higher literacy rate among the people, they start earning money through various sources. The insurers need to make this an opportunity to articulate products for the literate society. O M Technological The insurers need to create their products available and accessible on the mobile phone via online platforms. Mobile phones can be used as a convenient platform to create more customer awareness on the importance of the life insurance targeting new customers or to provide value added services for the existing customers. For an instance, allow the customers to review the premium history, paying premium online, sending premium reminders etc. O H Utilization of Big Data for insurance has become a trend in the global context as it allows the collection of data on customers, their behavior, lifestyles, health history etc. Big Data provide the O H 10 | P a g e

So that, proactive measures are required to comply with the regulatory requirement enforced by the Insurance Regulatory Commission of Sri Lanka. The new accounting standard (SLFRS 17) which have been issued by the Institute of accountants of Sri Lanka can have a significant effect on the accounting policies which are currently adopted by the company and on the future financial statements of the company. T M Table 2.4 - PESTEL analysis Source: [ CITATION Sof20 \l 1033 ] 12 | P a g e

3 Competitive analysis and SWOT analysis A total of 27 insurance companies are currently operating within the insurance sector of Sri Lanka out of which 13 companies are involved with life insurance companies. Among those life insurance companies, Ceylinco Life, AIA, Sri Lanka Insurance, Union Assurance can be considered as the top four players within the life insurance industry of Sri Lanka. So that, are the key competitors of Softlogic Life Insurance PLC. Being a developing country, the people in the country consider Life insurance as a not mandatory requirement for them and the obtaining of life insurance mainly depend on the level of disposable income of the people. The following graph provides the market share performances of the top insurance industry players in Sri Lanka. 2015 2016 2017 2018 2019 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 26.91% 25.06% 23.67% 22.03% 22.18% 18.21% 19.50% 18.74% 17.49% 16.45% 16.29% 15.71% 15.92% 16.08% 15.86% 13.33% 12.97% 13.03% 14.14% 14.00% 6.84% 7.62% 8.88% 10.52% 12.46% Market share performance Ceylinco Life Sri Lanka Insurance AIA Union Assurance Softlogic Life Figure 3.3 – Market share performances Source: Author developed 13 | P a g e

Understanding the current situation of the industry is important in understanding the suitable strategies for the future drive of the company. No strategy will work as intended if they are not developed and implemented suitably for the industry. Accordingly, the five forces framework analysis for Softlogic Life Insurance PLC can be carried out as follows. Force Implications Impact Threat of New Entrants  Difficult to enter the insurance industry as there is a minimum capital requirement of Rs. 500 Mn. Further, the industry has high number of regulatory requirements.  There are natural barriers such as technical expertise and lot of difficulties in recruiting and keeping the strong sales force.  High level of efforts is required to attract new customers has created a less attraction for the industry. H Threat of Substitutes  There are no direct substitutes for insurance products in Sri Lanka. But there can be indirect impacts from the retirement investment plans, pension schemes, savings plan that can be viewed as alternatives for the insurance products. So, there is a threat from the substitutes up to a certain level. M Bargaining power of Suppliers  The expertise in relation to the demanding insurance fields including in the areas of reinsurers, sales force, actuarial valuation etc. include the most important suppliers. Less availability of these expertise has created high bargaining power of suppliers in the industry. H Bargaining power of Buyers  Due to huge efforts required to attract new customers for insurance products as the view of most of the Sri Lankans is insurance as an unessential product. Therefore, the bargaining power of buyers is significant.  Due to low surrender value, the switching cost is higher at early stages of the policy. This might hinder the ability of customers to select any of the insurance company. M Rivalry among Exiting Life Insurers  Low degree of Insurance penetration has provided enough room for the growth. But it is much difficult to sell insurance products for the customers and therefore it will discourage new entrants.  Introduction of fairly differentiated products by the top players in the industry using advanced technologies has created high competition within the insurance industry. This is also supported by the competitive customer services and the high level of price competition among the rivalries. H Table 3.5 – Porter’s five forces analysis Source: [ CITATION Sof20 \l 1033 ] 15 | P a g e

Based on the above industry analysis, it can be concluded that the insurance industry in Sri Lanka is highly competitive which will demand Softlogic Life Insurance PLC to undertake strong strategies to address the competition successfully. Once a clear understanding about the industry and the competition is obtained, the next requirement is to identify the potential opportunities to focus on the required strategies for the success of the company. SWOT analysis allows the companies to identify the internal strengths and the weaknesses along with the external opportunities and the threats [ CITATION Eme171 \l 1033 ]. SWOT analysis for Softlogic Life Insurance PLC can be provided as follows. Factor Implications Strengths  The entity possesses an experienced, skilled, visionary set of senior managers, who are willing to accept the organizational challenges.  Having a solid network of branches which spread island wide  Well established and reputed brand name of the company among the community  High level of social media presence has allowed to have more access for the company information  The company has a talented, young and enthusiastic employee base  Having a mix of strong channels for distribution including stable agency channel, micro channel, fast growing alternate etc.  The company has achieved a strong financial performance over the last years providing it a strong financial position.  Strong reinsurance panel will add more value for the customers. Weaknesses  Poor expertise within the areas of big data, IoT and the other advanced technologies and emerging trends which can provide the customers with novel products.  Still, most of the organizational operations are carried out manually.  Currently, the company is experiencing a high level of employee turnover in sales force and therefore it has been unable to have the adequate sales for the company.  Less competent and skilled second layer of employees for some of the key departments in the company. Opportunitie s  The life expectancy of the people has increased to 77 years and birth rate has dropped to 15 per 1000 [ CITATION Uni201 \l 1033 ]. So, the increase in ageing population of Sri Lanka is expected to lead to higher demand for the health-related products.  The global insurance industry has experienced a change towards a technology-based business models through which the companies can actively reach to the customers, improve process efficiencies.  It has found that the insurers have started to leverage IoT, advanced analytics, machine learning etc. to develop granular individual risk profiles. 16 | P a g e

4 Strategic priorities Based on the identified opportunities under the SWOT analysis, Softlogic Life Insurance PLC need to develop and implement its future strategies to receive the intended objectives from those opportunities. Accordingly, the following strategic priorities will drive the company towards the success. Opportunity Implications Strategy The gross domestic production is expected to raise continuously from 2020 onwards With the recovery of the tourism and other industries by the COVID-19 pandemic, GDP is expected to grow by 0.8% from 2022 [ CITATION IMF20 \l 1033 ]. It is expected that the positive economic outlook will create a positive business growth potential for the insurance companies.  Product diversification under new categories of insurance products (Softlogic Life Legacy Plan, Softlogic Life Online Plan, Asiri Life Plan etc.)  Focusing on niche markets like introducing postal product Increasing ageing population The life expectancy of the people has increased to 77 years and birth rate has dropped to 15 per 1000 [ CITATION Uni201 \l 1033 ]. So, the increase in ageing population of Sri Lanka is expected to lead to higher demand for the health-related products.  Company has added new pension products to its products portfolio and health covers.  Company has positioned within the market as the best health insurance provider using the marketing campaigns concentrating on the growing health insurance market. Novel digital trends within the insurance industry The global insurance industry has experienced a change towards a technology-based business models through which the companies can actively reach to the customers, improve process efficiencies. It has found that the insurers have started to leverage IoT, advanced analytics, machine learning etc. to develop granular individual risk profiles.  The Company has implemented Robotic Process Automation within its policy underwriting and has increased the auto underwrite ratio.  The internal staff of the company have given KPIs based on the degree on innovative and digital solutions provided 18 | P a g e

towards the growth of the company. Growing Internet and mobile penetration The mobile penetration within Sri Lanka has been increased with the high usage of mobile phone by the people. It acts as a distribution channel for the insurance products as most of the advanced features are now available on the mobile phones. Social Media marketing can be presented as a type of internet marketing which has allowed to achieve the marketing communication and the branding targets.  Capitalization on the per day micro insurance product partnering with the business conglomerate of “Dialog Axiata”.  Focusing more on the social media marketing Recent changes in taxes The government of Sri Lanka has provided number of tax reliefs during 2020 with the view to increasing the country economic activities which increase disposable income of Sri Lankans. E.g. • Reduction of the VAT rate • Increase of PAYE threshold and the maximum rate of 18% • Removal of the WHT  Strengthening of the distribution channels to receive benefits through tax subsidies. Table 4.7 – The strategic priorities of the company Source: [ CITATION Sof20 \l 1033 ] 19 | P a g e