Union Assurance PlcCSELK: UAL.N0000

Interim Financial Statements for the Quarter ended 27th February 2026

· Issued by Union Assurance PLC
FOLDS OF VALUE

Union Assurance PLC

Condensed Interim Financial Statements For the Year Ended 31 December 2025



KEY FINANCIAL HIGHLIGHTS

Key financial highlights of our performance during the year are summarised below.

31 December

2025

Rs. '000

2024

Rs. '000

Change

%

Gross written premium

25,749,667

21,646,969

19

Profit from operations

4,965,478

4,890,963

2

Financial investments

108,252,636

95,567,444

13

Insurance contract liabilities

93,758,787

78,399,507

20

The Company recorded a growth of 19% in Gross Written Premiums (GWP) for the year, reflecting strong momentum across both regular new business premiums and renewal premiums.

The surplus generated from the life insurance business increased from Rs. 3.0 Bn to 3.4 Bn during the year, driven by strong business growth and enhanced operational efficiency, despite operating in a low-interest rate environment compared to the previous financial year.

The YoY net investment income grew by 5% despite the decline in re-investment rates while the equity portfolio performed well during the year contributing to a 52% growth in net realized gains over the previous year. Despite total claims, benefits and expenses growing by 16%, against a 19% growth in revenue, as a result of total other revenue growing by 7%, the profit from operations showed a 2% growth over the previous year.

On 18 September 2025, the Company divested its 22% stake in Fairfirst Insurance Limited to Fairfax Asia Limited. The reduction in profit contribution from the equity accounted investee compared to the corresponding year is due to accounting for only eight months of share of profits of Fairfirst as a consequence of the divestment. In addition, the Company incurred Rs. 311.5 Mn in capital gains tax on this divestment, which contributed to a 21% increase in income tax expense for the year.

Excluding the share of profits from the equity accounted investee and the one-off capital gains tax, the YoY Profit after tax grew by 2%.

A key strategic milestone during the year was the Company's entry into an exclusive bancassurance partnership with Sampath Bank PLC, significantly strengthening its bancassurance presence. The Company now operates one of the largest bancassurance networks in the country, a key pillar in its long-term value creation journey.

Gross written premium

7

25,749,667

21,646,969

19

Premium ceded to reinsurers

(1,697,889)

(1,491,725)

14

Net written premium

24,051,778

20,155,244

19

Other revenue

Net investment income

12,350,908

11,756,691

5

Net realised gains

1,307,593

862,097

52

Net fair value gains

1,998,775

1,999,211

(0)

Other income

52,635

45,220

16

Gain from sale of equity accounted investee

10

43,919

-

100

Total other revenue

15,753,830

14,663,219

7

Total net revenue

39,805,608

34,818,463

14

Benefits, claims and expenses

Net insurance benefits and claims paid

(7,848,300)

(6,692,988)

17

Net change in insurance claims outstanding

18,653

(24,942)

(175)

Change in insurance contract liabilities

(15,483,115)

(13,637,246)

14

Underwriting and net acquisition costs (net of reinsurance)

(4,906,249)

(4,000,274)

23

Other operating, administrative and selling expenses

(5,837,709)

(4,910,477)

19

Depreciation and amortisation

(783,410)

(661,573)

18

Total benefits, claims and expenses

(34,840,130)

(29,927,500)

16

Profit from operations

4,965,478

4,890,963

2

Share of results of equity accounted investee, net of tax

203,792

337,223

(40)

Profit before tax

5,169,270

5,228,186

(1)

Income tax expenses

8

(1,799,356)

(1,486,968)

21

Profit for the year

3,369,914

3,741,218

(10)

Earnings per share

Basic (Rs.)

5.72

6.35

(10)

Diluted (Rs.)

5.72

6.35

(10)

The notes form an integral part of these interim financial statements.

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

2025

2024

Change

For the year ended 31 December Rs. '000

Rs. '000

%

Profit for the year

3,369,914

3,741,218

(10)

Other comprehensive income

Items that will never be reclassified to profit or loss

Gains on revaluation of land and buildings

175,276

-

Share of net change in remeasurement loss on defined benefit plan of equity accounted investee, net of tax

-

(2,565)

Remeasurement loss on defined benefit plans

(17,950)

(13,631)

157,326

(16,196)

1,071

Items that are or may be reclassified subsequently to income statement

Fair value reserve (available for sale financial assets)

Net change in fair value of available for sale financial assets

(121,489)

339,110

Share of net change in fair value of available for sale financial assets of equity accounted investee, net of tax

15,112

38,517

Reclassification of company's share of accumulated other comprehensive income of equity accounted investee to the income statement

(43,919)

-

Net change in fair value of available for sale financial assets transferred to the income statement

(248,261)

(45,813)

(398,557)

331,814

(220)

Net change in liabilities of insurance contracts arising from fair value changes in available

for sale financial assets

(460,335)

698,251

Net change in fair value of available for sale financial assets of insurance liabilities transferred to the income statement

(39,293)

(108,143)

(499,628)

590,108

(185)

(898,185)

921,922

(197)

Other comprehensive income, net of tax

(740,859)

905,726

(182)

Total comprehensive income for the period, net of tax

2,629,055

4,646,944

(43)

The notes form an integral part of these interim financial statements.

INCOME STATEMENT

2025

2024

Change

For the Quarter ended 31 December Note

Rs. '000

Rs. '000

%

Gross written premium

7,287,439

6,371,206

14

Premium ceded to reinsurers

(436,263)

(396,793)

10

Net written premium

6,851,176

5,974,413

15

Other revenue

Net investment income

3,294,785

3,080,119

7

Net realised gains

302,220

244,575

24

Net fair value gains

298,596

1,632,237

(82)

Other income

29,496

24,757

19

Total other revenue

3,925,097

4,981,688

(21)

Total net revenue

10,776,273

10,956,101

(2)

Benefits, claims and expenses

Net insurance benefits and claims paid

(2,075,213)

(1,772,946)

17

Net change in insurance claims outstanding

(13,896)

(74,183)

(81)

Change in contract liabilities - Life Fund

(1,711,249)

(2,950,369)

(42)

Underwriting and net acquisition costs (net of reinsurance)

(1,295,621)

(1,104,930)

17

Other operating, administrative and selling expenses

(1,751,555)

(1,438,100)

22

Depreciation and amortisation

(212,679)

(207,597)

2

Total benefits, claims and expenses

(7,060,213)

(7,548,125)

(6)

Profit from operations

3,716,060

3,407,976

9

Share of results of equity accounted investee, net of tax

-

65,772

(100)

Profit before tax

3,716,060

3,473,748

7

Income tax expenses

(1,122,047)

(1,036,923)

8

Profit for the quarter

2,594,013

2,436,825

6

Earnings per share

Basic (Rs.)

4.40

4.14 6

Diluted (Rs.)

4.40

4.14 6

The notes form an integral part of these interim financial statements.

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

2025

2024

Change

For the Quarter ended 31 December Rs. '000

Rs. '000

%

Profit for the quarter

2,594,013

2,436,825

6

Other comprehensive income

Items that will never be reclassified to profit or loss

Gains on revaluation of land and buildings

175,276

-

Share of net change in remeasurement loss on defined benefit plan of equity accounted investee, net of tax

-

(2,565)

Remeasurement loss on defined benefit plans

(17,950)

(13,631)

157,326

(16,196)

1,071

Items that are or may be reclassified to profit or loss

Fair value reserve (available for sale financial assets)

Net change in fair value of available for sale financial assets

(60,727)

196,601

Share of net change in fair value of available for sale financial assets of equity accounted investee, net of tax

-

37,283

(60,727)

233,884

(126)

Net change in liabilities of insurance contracts arising from fair value changes in available for sale financial assets

(19,612)

533,203

Net change in fair value of available for sale financial assets of insurance liabilities transferred to the income statement

1,947

(87,909)

(17,665)

445,294

(78,392)

679,178

Other comprehensive income, net of tax

78,934

662,982

(88)

Total comprehensive income for the quarter, net of tax

2,672,947

3,099,807

(14)

The notes form an integral part of these interim financial statements.

STATEMENT OF FINANCIAL POSITION

As at 31 December

Note

2025

Rs. '000

2024

Rs. '000

Assets

Intangible assets

7,274,896

784,599

Property, plant and equipment

3,383,567

3,020,336

Right of use assets

508,588

590,235

Investment in equity accounted investee

-

2,419,176

Financial investments 11

108,252,636

95,567,444

Loans to life policyholders

2,858,074

2,651,478

Reinsurance receivable

526,145

418,852

Premiums receivable

1,032,595

1,066,641

Receivables and other assets

1,714,282

1,326,177

Cash in hand and at bank

1,698,143

1,614,403

Total assets

127,248,926

109,459,341

Equity and liabilities

Equity

Stated capital

1,000,000

1,000,000

Restricted regulatory reserve 12

3,381,934

3,381,934

Revaluation reserve

2,722,901

2,555,360

Available for sale reserve

3,357,792

4,255,977

Other reserves

86,684

76,573

Retained earnings

12,823,282

12,398,147

Total equity

23,372,593

23,667,991

Liabilities

Insurance contract liabilities 13

93,758,787

78,399,507

Insurance contract liabilities - Unit Linked

807,777

792,176

Lease liabilities

510,588

606,916

Employee benefit liabilities

284,384

229,709

Reinsurance payables

603,586

587,668

Other liabilities

7,712,135

5,040,845

Bank overdraft

199,076

134,529

Total liabilities

103,876,333

85,791,350

Total equity and liabilities

127,248,926

109,459,341

The notes form an integral part of these interim financial statements.

I certify that the above financial statements comply with the requirements of the Companies Act No. 07 of 2007.



Himani Weerasekera

Chief Financial Officer

The Board of Directors is responsible for the preparation and presentation of these financial statements. Signed on behalf of the Board:



K. N. J. Balendra D. P. Gamlath

Chairperson Director

Colombo

27 February 2026

STATEMENT OF CHANGES IN EQUITY

Reserves

Restricted

Reserve

Other reserves

Available Other

Rs. '000

Stated capital

regulatory reserve

Revaluation on

reserve merger

for sale capital Retained reserve reserves earnings

Total

Balance as at 1 January 2024

1,000,000

3,381,934

2,563,095 16,752

3,334,055 59,791 13,805,444

24,161,071

Profit for the year

-

-

- -

- - 3,741,218

3,741,218

Other comprehensive income for the

year

Net change in fair value of available for sale

financial assets - - - - 293,297 - - 293,297 Net change in liabilities of insurance

contracts arising from fair value changes

in available for sale financial assets

-

-

-

-

590,108

-

-

590,108

Remeasurement loss on defined benefit plans

-

-

-

-

-

(13,631)

-

(13,631)

Share of net change in fair value of

available for sale financial assets of

equity accounted investee, net of tax

-

-

-

-

38,517

-

-

38,517

Share of net change in remeasurement loss on defined benefit plan of equity accounted investee, net of tax

-

-

-

-

-

(2,565)

-

(2,565)

Total other comprehensive income

-

-

-

-

921,922

(16,196)

-

905,726

Total comprehensive income for the year

-

-

-

-

921,922

(16,196)

3,741,218

4,646,944

Transactions with owners, transfers, recorded directly in equity

Contributions and distributions

First and final dividend 2023

-

-

-

-

- -

(5,156,250)

(5,156,250)

Share based payments

-

-

-

-

- 16,226

-

16,226

Transfer from revaluation reserve to retained earnings

-

-

(7,735)

-

- -

7,735

-

Total contributions and distributions

-

-

(7,735)

-

- 16,226

(5,148,515)

(5,140,024)

Balance as at 31 December 2024

1,000,000

3,381,934

2,555,360

16,752

4,255,977 59,821

12,398,147

23,667,991

The notes form an integral part of these interim financial statements.

Reserves

Other reserves

Restricted

Reserve

Available Other

Stated

regulatory

Revaluation

on

for sale capital

Retained

Rs. '000 capital

reserve

reserve

merger

reserve reserves

earnings

Total

Balance as at 1 January 2025 1,000,000

3,381,934

2,555,360

16,752

4,255,977 59,821

12,398,147

23,667,991

Profit for the year -

-

-

-

- -

3,369,914

3,369,914

Other comprehensive income for the year

Net change in fair value of available for sale

financial assets -

-

-

-

(369,750) -

-

(369,750)

Net change in liabilities of insurance contracts arising from fair value changes

in available for sale financial assets -

-

-

-

(499,628) -

-

(499,628)

Gain on revaluation of land and buildings -

-

175,276

-

- -

-

175,276

Remeasurement loss on defined benefit

plans -

-

-

-

- (17,950)

-

(17,950)

Share of net change in fair value of available for sale financial assets of

equity accounted investee, net of tax -

-

-

-

15,112 -

-

15,112

Reclassification of company's share of accumulated other comprehensive income of equity accounted investee to the income statement

-

-

-

-

(43,919)

-

-

(43,919)

Total other comprehensive income

-

-

175,276

-

(898,185)

(17,950)

-

(740,859)

Total comprehensive income for the

year

-

-

175,276

-

(898,185)

(17,950)

3,369,914

2,629,055

Transactions with owners, transfers, recorded directly in equity

Contributions and distributions

First and final dividend 2024

-

-

-

-

- -

(2,946,428)

(2,946,428)

Share based payments

-

-

-

-

- 21,975

-

21,975

Transfer of share of defined benefit plans of equity accounted investee from other capital reserve to retained earnings

-

-

-

-

- 6,086

(6,086)

-

Transfer from revaluation reserve to

retained earnings

-

(7,735)

-

-

7,735

-

Total contributions and distributions

-

-

(7,735)

-

-

28,061

(2,944,779)

(2,924,453)

Balance as at 31 December 2025

1,000,000

3,381,934

2,722,901

16,752

3,357,792

69,932

12,823,282

23,372,593

The notes form an integral part of these interim financial statements.

STATEMENT OF CASH FLOWS

For the year ended 31 December

Note

2025

Rs. '000

2024

Rs. '000

Cash flows from operations

Insurance premiums received

25,783,713

21,631,772

Reinsurance premiums paid

(556,625)

(131,754)

Insurance benefits and claims paid

(8,837,496)

(7,696,259)

Reinsurance claims received

989,196

1,003,271

Payments to intermediaries to acquire insurance contracts

(4,711,398)

(3,981,172)

Cash paid to and on behalf of employees

(2,539,133)

(2,236,307)

Interest received

10,862,602

10,486,711

Dividends received

245,122

183,551

Other operating cash flows

(4,346,105)

(3,994,490)

Cash generated from operating activities A

16,889,876

15,265,323

Interest paid

(58,256)

(53,838)

Income tax paid

(1,706,740)

(1,524,456)

Employee benefits paid

(16,641)

(25,437)

Net cash flow from operating activities

15,108,239

13,661,592

Cash flows used in investing activities

Purchase of investments

(54,987,269)

(56,247,530)

Maturity proceeds of investments

15,515,301

13,414,782

Proceeds from sale of investments

30,385,133

35,424,368

Purchase of property, plant and equipment

(338,546)

(131,804)

Purchase of intangible assets

(5,141,136)

(54,560)

Proceeds from sale of Investment in equity accounted investee

2,638,080

-

Proceeds from sale of property, plant and equipment

3,772

3,050

Net cash used in investing activities

(11,924,665)

(7,591,694)

Net cash inflow before financing activities

3,183,574

6,069,898

Cash flows used in financing activities

Dividends paid to equity holders of the Company

(2,946,125)

(5,156,250)

Settlement of lease liabilities

(218,256)

(150,689)

Net cash used in financing activities

(3,164,381)

(5,306,939)

Net increase in cash and cash equivalents

19,193

762,959

Cash and cash equivalents at the beginning of the year

1,479,874

716,915

Cash and cash equivalents at the end of the year B

1,499,067

1,479,874

The notes form an integral part of these interim financial statements.

For the year ended 31 December

2025

Rs. '000

2024

Rs. '000

NOTE A.

Reconciliation of profit before taxation with cash from operating activities

Profit before tax

5,169,270

5,228,186

Non - cash items included in profit before tax

Depreciation and amortisation

783,410

661,573

Provision for employee benefits

53,366

50,937

Provision for doubtful debtors

1,774

2,717

Net realised gains

(1,307,593)

(862,097)

Net fair value gains

(1,998,775)

(1,999,211)

Gain on sale of property, plant and equipment

(635)

(1,755)

Amortisation of financial investments

(765,403)

(874,220)

Amortisation of lease liabilities

58,132

53,658

Scrip dividend income

(18,845)

(25,944)

Share of results of equity accounted investee

(203,792)

(337,223)

Reclassification of company's share of accumulated other comprehensive income of equity accounted investee to the income statement

(43,919)

-

Interest expense on obligation to repurchase securities

124

180

Share based payment expenses

21,975

16,226

Profit before working capital changes

1,749,089

1,913,027

Net change in operational assets

Net change in reinsurance assets

(107,293)

28,706

Net change in premiums receivable

34,046

(15,197)

Net change in receivables and other assets

(974,281)

(767,119)

Net change in operational liabilities

Net change in life insurance contract liabilities

15,374,881

13,429,607

Net change in reinsurance liabilities

15,918

222,641

Net change in other liabilities

797,516

453,658

Cash generated from operating activities

16,889,876

15,265,323

NOTE B.

Cash and cash equivalents at the end of the year

Cash in hand and at bank

1,698,143

1,614,403

Bank overdraft

(199,076)

(134,529)

Cash and cash equivalents at the end of the year

1,499,067

1,479,874

For the purpose of the cash flow statement, cash and cash equivalent consist of cash in hand & at bank, net of outstanding bank overdraft as shown above.

The notes form an integral part of these interim financial statements.

LIFE INSURANCE FUND STATEMENT OF FINANCIAL POSITION

As at 31 December

Note

2025

Rs. '000

2024

Rs. '000

Assets

Intangible assets

487,864

508,157

Property, plant and equipment

3,383,567

3,020,336

Right of use assets

508,588

590,235

Financial investments

97,417,502

82,119,212

Loans to life policyholders

2,858,074

2,651,478

Reinsurance receivable

526,145

418,852

Premiums receivable

1,032,595

1,066,641

Receivables and other assets

1,422,349

1,307,486

Cash in hand and at bank

1,650,737

1,577,123

Total assets

109,287,421

93,259,520

Reserves and liabilities

Reserves

Revaluation reserve

2,247,041

2,079,500

Available for sale reserve

2,827,337

3,326,965

Other reserves

(49,237)

(31,286)

Total reserves

5,025,141

5,375,179

Liabilities

Insurance contract liabilities 13

93,758,787

78,399,507

Insurance contract liabilities - Unit Linked

807,777

792,176

Lease liabilities

510,588

606,916

Employee benefit liabilities

284,384

229,709

Reinsurance payables

603,586

587,668

Other liabilities

8,098,082

7,133,836

Bank overdraft

199,076

134,529

Total liabilities

104,262,280

87,884,341

Total reserves and liabilities

109,287,421

93,259,520

NOTES TO THE FINANCIAL STATEMENTS

  1. REPORTING ENTITY

    Union Assurance PLC ('the Company') is a public limited liability company incorporated and domiciled in Sri Lanka and the ordinary shares of the Company are listed on the Colombo Stock Exchange. The registered office and principal place of business of the Company is located at No. 20, St. Michael's Road, Colombo 03.

    The Company's controlling entity and ultimate Parent undertaking is John Keells Holdings PLC which is incorporated in Sri Lanka.

  2. APPROVAL OF FINANCIAL STATEMENTS

    The interim financial statements for the year ended 31 December 2025 were authorised for issue by the Board of Directors on 27 February 2026.

  3. PRESENTATION OF FINANCIAL STATEMENTS

    The Company divested its stake in Fairfirst Insurance Limited, an equity accounted investee on 18 September 2025. Fairfirst Insurance Limited has been presented in the financial statements in accordance with Sri Lanka Accounting Stadnards, LKAS 28

    - Investment in Associate and Joint Venture up to the disposal date. Please refer Note 10 for details.

  4. BASIS OF PREPARATION AND CHANGES TO THE COMPANY'S ACCOUNTING POLICIES

    1. Basis of Preparation

      The interim financial statements have been prepared in compliance with Sri Lanka Accounting Standard LKAS 34 - Interim Financial Reporting. These interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2024. Further, provisions of the Companies Act No.7 of 2007 have been considered in preparing the interim financial statements of the Company. The same accounting policies have been followed in preparation of these interim financial statements as stated in the Audited Financial Statements for the year ended 31 December 2024.

      The interim condensed financial statements are presented in Sri Lankan Rupees (LKR) and all values are rounded to the nearest thousand except when otherwise indicated.

    2. Fair value measurement and related fair value disclosures

      The fair values of all the financial assets and financial liabilities recognised during the period were not materially different from the transaction prices at the date of initial recognition. All listed equity instruments were measured based on the market prices as at 31 December 2025 and classified as level 1 as per the fair value hierarchy. There were no transfers between Level 1 and Level 2 and no transfers into or out of Level 3 categories as per the fair value hierarchy during the reporting period.

  5. SLFRS 9 - FINANCIAL INSTRUMENTS AND SLFRS 17 - INSURANCE CONTRACTS

    SLFRS 9 is effective for annual periods beginning on or after 1 January 2018. It replaces LKAS 39 - Financial Instruments: Recognition and Measurement.

    Based on the proposed amendments to SLFRS 4 - Insurance contracts (to be replaced by SLFRS 17), the entities whose predominant activity is issuing insurance contracts are permitted to defer the full application of SLFRS 9 until the adoption of SLFRS 17, which comes into effect for financial periods beginning on or after 1 January 2026.

    The Company has used the above temporary exemption.

  6. OPERATING SEGMENT

    The Company is one legal entity however for Management purposes and to comply with the regulatory framework, the Company is organised into business units based on their products and services and has two reportable operating segments, Policyholder fund and Shareholder fund. These segments are managed separately because they require different operational, risk management and marketing strategies. All operating results are reviewed regularly by the Chief Executive Officer (CEO) and Corporate Management to make decisions regarding resource allocation and assess its performance, and for which financial information is available.

    NOTES TO THE FINANCIAL STATEMENTS

    For the year ended 31 December Rs. '000

    Policyholder Shareholder

    2024

    Total Policyholder Shareholder

    Total

    Fund

    Fund

    Fund

    Fund

    2025

    Segment revenue

    Gross Written Premium

    25,749,667

    -

    25,749,667

    21,646,969

    -

    21,646,969

    Net Written Premium

    24,051,778

    -

    24,051,778

    20,155,244

    -

    20,155,244

    Total Investment Income and Other

    Revenue

    14,198,101

    1,555,729

    15,753,830

    12,799,403

    1,863,816

    14,663,219

    Total Net Revenue

    38,249,879

    1,555,729

    39,805,608

    32,954,647

    1,863,816

    34,818,463

    Total Claims and Expenses

    (19,366,764)

    9,749

    (19,357,015)

    (16,317,401)

    27,147

    (16,290,254)

    Change in Contract Liabilities

    (15,483,115)

    -

    (15,483,115)

    (13,637,246)

    -

    (13,637,246)

    Share of results of equity accounted

    investee, net of tax

    -

    203,792

    203,792

    -

    337,223

    337,223

    Surplus distributed to shareholders

    (3,400,000)

    3,400,000

    -

    (3,000,000)

    3,000,000

    -

    Segment Profit Before Tax

    -

    5,169,270

    5,169,270

    -

    5,228,186

    5,228,186

    Income Tax Expenses

    -

    (1,799,356)

    (1,799,356)

    -

    (1,486,968)

    (1,486,968)

    Segment Profit After Tax

    -

    3,369,914

    3,369,914

    -

    3,741,218

    3,741,218

    All revenues are from external customers. There is no revenue from transactions between operating segments

    As at 31 December Rs. '000

    Policyholder Shareholder

    2024

    Total Policyholder Shareholder

    Total

    Fund

    Fund

    Fund

    Fund

    2025

    Segment Assets

    109,287,422

    17,961,504

    127,248,926

    93,259,520

    16,199,821

    109,459,341

    Segment Equity and Reserves

    5,025,142

    18,347,451

    23,372,593

    5,375,177

    18,292,814

    23,667,991

    Segment Liabilities

    100,864,667

    3,011,666

    103,876,333

    84,888,302

    903,048

    85,791,350

  7. GROSS WRITTEN PREMIUM

    For the year ended 31 December

    2025 2024

    Rs. '000 Rs. '000

    Conventional

    25,741,439

    21,638,719

    Unit linked

    8,228

    8,250

    Total gross written premium

    25,749,667

    21,646,969

  8. INCOME TAX EXPENSE

    1. Current tax

      Gains and profits from the Life Insurance Business are ascertained in terms of Section 67 of the Inland Revenue Act No. 24 of 2017 and other amendments in line with Inland Revenue (Amendment) Act No. 45 of 2022. As per this section, an income tax rate of 30% is applicable on gains and profits which is the aggregate of;

      Surplus distributed to shareholders from the Life insurance policyholders fund as certified by the Actuary. Investment income of the shareholder fund less any expenses incurred in the production of such income.

      Surplus distributed to a Life insurance policyholder who shares profits of an entity engaged in the business of life insurance.

      Amount Recognised in the Profit or Loss

      For the year ended 31 December

      2025 2024

      Rs. '000 Rs. '000

      Income tax expense

      (1,487,847)

      (1,486,968)

      Capital gain tax on disposal of equity accounted investee

      (311,509)

      -

      Current tax expense for the year

      (1,799,356)

      (1,486,968)

  9. PROFITS FROM LIFE INSURANCE

    The valuation of the life insurance fund as at 31 December 2025 was carried out by Mr. Vivek Jalan FIA, FIAI of Towers Watson India Private Limited, appointed Actuaries of the Company who recommended a sum of Rs. 3,400 million to be transferred from the life fund to the shareholders' fund for the year 2025.

  10. DIVESTMENT OF INVESTMENT IN ASSOCIATE COMPANY

    The Company divested its 22% stake in Fairfirst Insurance Limited comprising of 30,800,000 ordinary shares to Fairfax Asia Limited for a total consideration of Rs. 2,638 Mn.

    Gain on disposal of equity accounted investee

    For the year ended 31 December

2025

Rs. '000

Sales proceeds

2,638,080

Investment in equity accounted investee

(2,638,080)

Reclassification of company's share of accumulated other comprehensive income of equity accounted investee to

the income statement

43,919

Gain on disposal of equity accounted investee

43,919

  1. FINANCIAL INVESTMENTS

    As at 31 December

    2025 2024

    Rs. '000 Rs. '000

    Held to maturity financial assets (HTM)

    48,222,643

    46,244,375

    Loans and receivables (L&R)

    13,267,646

    14,442,825

    Available for sale financial assets (AFS)

    34,774,562

    27,164,487

    Financial assets at fair value through profit or loss (FVTPL)

    11,987,785

    7,715,757

    Total financial investments

    108,252,636

    95,567,444

  2. RESTRICTED REGULATORY RESERVE

    Based on the direction issued by the Insurance Regulatory Commission of Sri Lanka (IRCSL) dated 20 March 2018 and subsequent approval, the Company has transferred Rs. 3,382 million attributable to non - participating fund and non unit fund of unit linked business from life policyholder fund to life shareholder fund (SHF). The distribution of one - off surplus to shareholders, held as part of the Restricted Regulatory Reserve under equity in the statement of financial position is subject to meeting governance requirements stipulated by the IRCSL and can only be released upon receiving approval from the IRCSL. The one - off surplus in the SHF is represented by government debt securities as per the direction of the IRCSL.

    As at 31 December

    2025 2024

    Rs. '000 Rs. '000

    Transfer of one - off surplus from non participating fund

    3,393,900

    3,393,900

    Transfer from shareholder fund for the one - off deficit created in the non-unit fund of unit linked life

    insurance contracts

    (11,966)

    (11,966)

    3,381,934

    3,381,934

    NOTES TO THE FINANCIAL STATEMENTS

  3. INSURANCE CONTRACT LIABILITIES

    As at 31 December

    2025 2024

    Rs. '000 Rs. '000

    Life insurance fund

    92,807,484

    77,514,257

    One - off surplus arising from changing policy liability valuation relating to participating fund

    435,046

    435,046

    Effect of Taxation on Surplus / Bonus transferred to - Policyholders

    (101,643)

    (79,055)

    Claims payable

    617,900

    529,259

    Total insurance contract liabilities

    93,758,787

    78,399,507

    The one off surplus retained in Insurance Contract Liabilities comprises of Rs. 432.5 million attributable to participating business and Rs. 2.5 million attributable to unit linked fund.

    1. Movement In Insurance Contract Liabilities

      31.12.2025 31.12.2024

      As at

      Rs. '000 Rs. '000

      Conventional life insurance fund

      Balance as at 1 January

      78,076,935

      64,797,623

      Increase in life insurance fund before surplus transfer to shareholders

      18,637,793

      16,314,179

      Transfer to shareholders

      (3,344,665)

      (3,000,000)

      Effect of Taxation on Surplus / Bonus transferred to - Policyholders

      (22,588)

      (23,983)

      Net change in unclaimed benefits

      92,993

      (10,884)

      Balance as at 31 December - Conventional Life insurance

      93,440,468

      78,076,935

      Non Unit Fund of Linked Life Insurance Contracts

      Balance as at 1 January

      322,572

      245,761

      Increase in non unit fund of linked life insurance before surplus transfer to shareholders

      55,435

      69,692

      Transfer to shareholders

      (55,335)

      -

      Net change in unclaimed benefits

      (4,353)

      7,119

      Balance as at 31 December - Non unit fund of linked Life insurance

      318,319

      322,572

      93,758,787

      78,399,507

  4. LIABILITY ADEQUACY TEST (LAT)

    As at the reporting date, liability adequacy test was performed by the appointed actuary Mr. Vivek Jalan FIA, FIAI of Willis Towers Watson India Private Limited and concluded that, the liability value is sufficient to meet future benefits and expenses. Hence, no provision was required to be made for any premium deficiency.

  5. AUDIT OF THE INTERIM FINANCIAL STATEMENTS

    Figures for the twelve months are provisional and unaudited

  6. COMPARATIVE INFORMATION

    The presentation and classification in the financial statements are amended where appropriate to ensure comparability with the current period.

  7. RELATED PARTY TRANSACTIONS

    The nature of the related parties in the current period is similar to those reported in the audited financial statements for the year ended 31 December 2024.

    Transactions with the Ultimate Parent

    As at 31 December

    2025 2024

    Rs. '000 Rs. '000

    Investment in shares

    1,300,274

    1,092,104

    Payable for shared services

    (24,850)

    (44,017)

    For the year ended 31 December

    Transaction amount during the year

    2025 2024

    Rs. '000 Rs. '000

    Receiving of services

    (188,606)

    (203,202)

    Dividend income received

    11,964

    5,654

    Dividend paid

    (2,651,786)

    (4,640,625)

    Purchase of intangible assets

    (15,733)

    -

    Net Purchase of share Investments

    283,864

    151,176

    Gratuity transfer

    1,234

    -

    Transactions with companies under common control

    As at 31 December

    2025 2024

    Rs. '000 Rs. '000

    Debenture, share Investments and distribution rights

    846,417

    588,551

    Payable for shared services

    (10,662)

    (5,608)

    For the year ended 31 December

    Transaction amount during the year

    2025 2024

    Rs. '000 Rs. '000

    Purchase of goods

    (8,753)

    (7,458)

    Receiving of services

    (655,139)

    (475,022)

    Purchase of property, plant and equipment

    (111,415)

    (27,970)

    Interest received

    38,653

    53,187

    Dividend received

    1,201

    -

    Net Purchase / (Sale) of share Investments

    329,651

    (44,437)

    Gratuity transfer

    -

    (396)

    NOTES TO THE FINANCIAL STATEMENTS

    Transactions with Associates

    As at 31 December

    2025

    Rs. '000

    2024

    Rs. '000

    Amount receivable / (payable)

    -

    -

    For the year ended 31 December

    Transaction amount during the year

    2025 2024

    Rs. '000 Rs. '000

    (221)

Receiving of services (292)

Companies controlled / jointly controlled / significantly influenced by KMP and their close family members

As at 31 December

2025 2024

Rs. '000 Rs. '000

-

Amount receivable / (payable) -

For the year ended 31 December

Transaction amount during the year

2025 2024

Rs. '000 Rs. '000

Receiving of services

(27,358)

(19,137)

Transactions with Key Management Personnel (KMP)

Rendering / (Receiving) of services

-

-

Transactions with Close Family Members of KMP

Rendering / (Receiving) of services

-

-

  1. CAPITAL AND OTHER COMMITMENTS

    The capital commitments approved and contracted as at the reporting date were Rs. 96 million.

  2. CONTINGENCIES

    Income tax assessments relating to years of assessments 2010/11, 2011/12, 2012/13, 2013/14, 2014/15, 2015/16, 2016/17, 2017/18, 2018/19, 2019/20, 2020/21 and 2021/22.

    The Department of Inland Revenue (IRD) has raised assessments on Union Assurance PLC for the years of assessments 2010/11, 2011/12, 2012/13, 2014/15, 2015/16, 2017/18, 2018/19 and 2019/20 assessing the Life insurance business to pay income tax liabilities of Rs. 13 million, 132 million, Rs. 411 million together with a Rs. 233 million penalty totalling to Rs.644 million, Rs. 887 million together with a Rs. 443 million penalty totalling to Rs.1,330 million, Rs. 832 million together with a Rs. 416 million penalty totalling to Rs. 1,248 million, Rs.749 million along with a Rs. 368 million penalty totalling to Rs.1,117 million, Rs. 701 million along with a Rs. 498 million penalty totalling to Rs. 1,199 million and Rs. 856 million respectively. Company lodged appeals against the said assessments with the Tax Appeals Commission (TAC) and TAC issued it's determinations in favour of the company for years of assessments 2012/13, 2014/15 and 2015/16 and in favour of the Inland Revenue Department for years of assessments 2010/11, 2011/12, 2017/18, 2018/19 and 2019/20. Cases were filed at the Court of Appeal against said determinations.

    The court of appeal delivered the order on 19 February 2026 for Y/A 2010/11, 2011/12 and 2015/16 in favour of the company allowing the company to deduct all management expenses against the investment income of the life insurance business.

    The IRD has raised assessments on Union Assurance PLC for the years of assessments 2013/14, 2016/17 and 2020/21 assessing the Life insurance business to pay income tax liabilities of Rs.175 million together with a Rs. 88 million penalty totalling to Rs. 263 million, Rs. 472 million together with a Rs. 236 million penalty totalling to Rs. 708 million and Rs. 627 million respectively. The Company has lodged valid appeals against said assessments with the Tax Appeals Commission (TAC).

    The IRD has raised an assessment on Union Assurance PLC for the year of assessment 2021/22 assessing the Life insurance business to pay income tax liability of Rs. 59 million. The Company has lodged a valid appeal with the Commissioner General of IRD against said assessment.

    VAT assessments relating to years of assessments 2018 and 2019

    The IRD has raised assessments on Union Assurance PLC for the years of assessments 2018 and 2019, assessing the Life insurance business to pay a VAT liability of Rs.0.01 million along with a Rs. 0.009 million penalty totalling Rs. 0.02 million and Rs.

    0.06 million along with a Rs. 0.04 million penalty totalling Rs. 0.1 million respectively. The Company has lodged valid appeals with the Commissioner General of IRD against said assessments.

    VAT on Financial Services assessments relating to years of assessments 2016, 2019, 2021, 2022 and 2023

    The IRD has raised assessments on Union Assurance PLC for the years of assessments 2016 & 2019, assessing the Life insurance business to pay a VAT on Financial Services liability of Rs. 59 million along with a Rs. 33 million penalty totalling to Rs. 92 million and Rs. 108 million along with a Rs. 54 million penalty totalling to Rs. 162 million respectively. The Company has lodged valid appeals against the said assessments with the TAC.

    The IRD has raised assessments on Union Assurance PLC for the years of assessments 2021, 2022 and 2023 assessing the Life insurance business to pay VAT on Financial Services liability of Rs. 175 million along with a Rs. 88 million penalty totalling to Rs. 263 million, Rs. 318 million along with a Rs. 159 million penalty totalling to Rs. 477 million and Rs. 569 million along with a Rs. 267 million penalty totalling to Rs. 836 million. The Company has lodged valid appeals with the Commissioner General of Inland Revenue against the said assessments.

    Social Security Contribution Levy assessment relating to year of assessment 2023

    The IRD has raised an assessment on Union Assurance PLC for the year of assessment 2023 assessing the Life insurance business to pay a Social security contribution levy liability of Rs. 79 million along with a Rs. 45 million penalty totalling to Rs.124 million. The Company has lodged a valid appeal with the Commissioner General of Inland Revenue against the said assessment.

    Surcharge Tax assessment relating to year of assessment 2020/21

    The IRD has raised an assessment on Union Assurance PLC for the year of assessment 2020/21 assessing the Life insurance business to pay a surcharge tax liability of Rs. 476 million along with a Rs. 453 million penalty totalling to Rs. 929 million. The Company has lodged a valid appeal against the said assessment with the TAC.

    Directors are of the view that the Company has followed due process and acted in accordance with the prevailing laws in its tax submissions for above years of assessments and therefore, the above assessments have no rationale or basis in law.

    The Company operates in the insurance industry and is subject to legal proceedings in the normal course of business

    While it is not practicable to forecast or determine the final results of all pending or potential legal proceedings, Directors do not believe that such proceedings (including litigation) will have a material effect on the Company's results and financial position. All pending litigation for claims have been evaluated and adequate provisions have been made in the financial statements.

    NOTES TO THE FINANCIAL STATEMENTS

  3. SHARE INFORMATION

    Market Price Per Share

    For the quarter ended 31 December

    2025

    Rs.

    2024

    Rs.

    Last traded

    77.00

    62.00

    Highest price per share for the period

    86.50

    62.00

    Lowest price per share for the period

    71.50

    46.20

    31.12.2025 31.12.2024

    As at

    Rs.

    Rs.

  4. NET ASSETS PER SHARE

    39.66

Net assets per share 40.16

Net assets per share has been calculated based on the number of shares in issue as at each reporting date.

Number of shares as at 31 December

2025

2024

  1. STATED CAPITAL

    589,285,720

Ordinary shares

As at 30 September 2025 No. of Shares %

  1. TWENTY LARGEST SHAREHOLDERS

589,285,720

As at 31 December 2025

No. of Shares

%

1

John Keells Holdings PLC

530,357,150

90.0

530,357,150

90.0

2

Mr. S.N.P. Palihena

14,000,000

2.4

14,000,000

2.4

3

People's Leasing & Finance PLC / L.P. Hapangama

5,442,538

0.9

5,259,045

0.9

4

J.B. Cocoshell (PVT) LTD

3,573,256

0.6

3,573,256

0.6

5

Corporate Holdings (Private) Limited A/C No.01

1,513,730

0.3

1,513,730

0.3

6

Standard Chartered Bank DIFC Branch S/A EFG

HERMES UAE L.L.C

1,250,275

0.2

1,250,275

0.2

7

MR. J.P. Paul

1,174,600

0.2

1,207,793

0.2

8

Mrs. A. Selliah

1,080,000

0.1

1,080,000

0.2

9

Mr. J.D. Bandaranayake & Miss. N. Bandaranayake &

Dr. (Mrs.) V. Bandaranayake

905,929

0.1

905,929

0.1

10

Mr. J.D. Bandaranayake & Dr. (Mrs.) V. Bandaranayake

& Miss. I. Bandaranayake

884,377

0.1

884,377

0.1

11

People's Leasing & Finance PLC / L.H.L.M.P. Haradasa

696,867

0.1

901,008

0.1

12

Dr. S. Selliah

580,000

0.1

580,000

0.1

13

Mr. J.W. Nanayakkara

562,500

0.1

562,500

0.1

14

Mr. H.A.D. Ratnapala / Hewa Algiriyage Dias

562,500

0.1

562,500

0.1

15

Arunodhaya Industries (Private) Limited

400,000

0.1

400,000

0.1

16

Mr. S. Sivajeevan

400,000

0.1

400,000

0.1

17

Arunodhaya (Private) Limited

400,000

0.1

400,000

0.1

18

Odyssey Capital Partners (Private) Limited

400,000

0.1

475,000

0.1

19

Arunodhaya Investments (Private) Limited

400,000

0.1

400,000

0.1

20

MR. N.D.Kurukulasuriya

390,000

0.1

390,000

0.1

Other

24,311,998

4.0

24,183,157

4.0

589,285,720

100

589,285,720

100

24 DIVIDENDS PAID

For the year ended 31 December

2025

Rs. '000

2024

Rs. '000

Final dividend for 2024 - 5.00 (2023 - 8.75)

2,946,428

5,156,250

25 DIRECTORS' SHAREHOLDINGS

No. of shares as at 31 December

2025

2024

Mr. K. N. J. Balendra (Chairperson)

Nil

Nil

Mr. S. Rajendra - Resigned w.e.f 31 December 2025

Nil

Nil

Mr. D. P. Gamlath

Nil

Nil

Mr. D. H. Fernando

Nil

Nil

Mr. S. A. Appleyard

Nil

Nil

Mr. P. T. Wanigasekara

Nil

Nil

Ms. C. M. L. D. Bandaranaike - Appointed w.e.f 28 April 2025

Nil

N/A

26

CHIEF EXECUTIVE OFFICER'S SHAREHOLDING

No. of shares as at 31 December

2025

2024

Mr. Senath Jayatilake

Nil

Nil

  1. PUBLIC SHAREHOLDING

    The Company is listed on the Colombo Stock Exchange and the percentage of shares held by the public, the number of public shareholders and the float adjusted market capitalization is as given below:

    As at 31 December

    2025

    2024

    Public shareholding (%)

    10.00

    10.00

    Public shareholders

    2,957

    2,390

    Compliant under option 1 - float adjusted market capitalization (Rs. Bn)

    4.6

    3.6

  2. EVENTS AFTER THE REPORTING PERIOD

The Board of Directors of the Company has declared a first and final dividend of Rs. 5.00 per share out of retained earnings, on 27 February 2026. The dividend will be paid in March 2026. As required by Section 56 of the Companies Act No. 07 of 2007, the Board of Directors confirms that the Company satisfied the solvency test in accordance with Section 57 prior to declaring the first and final dividend. A statement of solvency duly completed and signed by the Directors has been audited by Messrs. KPMG. In accordance with LKAS 10, Events After the Reporting Period, the first and final dividend has not been recognised as a liability in the financial statements as at 31 December 2025.

Mr. Senath Jayatilake, CEO of Union Assurance has been appointed to the Board of Directors of the Company as an Executive Director of the Company with effect from 23 February 2026.

CORPORATE INFORMATION

Name of Company

Union Assurance PLC

Legal Form

A public limited liability company incorporated in Sri Lanka on 8 January 1987 and registered under the Companies Act No. 07 of 2007 and quoted on the Colombo Stock Exchange since 1988.

Company Registration Number

PQ 12

Tax Payer Identification Number (TIN)

134001372

Directors

K. N. J. Balendra - Chairperson

S. Rajendra - Resigned w.e.f 31 December 2025

D. H. Fernando

S. A. Appleyard

D. P. Gamlath

P. T. Wanigasekara

C. M. L. Dias Bandaranaike - Appointed

w.e.f 28 April 2025

S. A. J. S. W Jayatilake - Appointed

w.e.f 23 February 2026

Human Resources and Compensation Committee

D. H. Fernando - Chairperson

K. N. J. Balendra - Appointed

w.e.f 01 January 2026

S. Rajendra - Resigned w.e.f 31 December 2025

P. T. Wanigasekara

Nominations and Governance Committee

D. H. Fernando - Chairperson

K. N. J. Balendra

P. T. Wanigasekara

Related Party Transactions Review Committee

P. T. Wanigasekara - Chairperson

S. A. Appleyard

D. H. Fernando

C. M. L. D. Bandaranaike - Appointed

w.e.f 28 April 2025

Board Audit and Compliance Committee

P. T. Wanigasekara - Chairperson

D. H. Fernando

S. A. Appleyard

C. M. L. D. Bandaranaike - Appointed

w.e.f 28 April 2025

Investment Committee

J. G. A. Cooray - Chairperson

P. T. Wanigasekara Senath Jayatilake Himani Weerasekera

Malaka Mihindukulasuriya Angelo Keil

SLFRS-17 Steering Committee

S. A. Appleyard - Chairperson

S. Rajendra - Resigned w.e.f 31 December 2025

Sherin Cader

Secretaries and Registrars

Keells Consultants (Private) Limited 117, Sir Chittampalam A. Gardiner Mawatha,

Colombo 2.

Auditors

Messrs. KPMG (Chartered Accountants) PO Box 186,

32A, Sir Mohamed Macan Markar Mawatha,

Colombo 3.

Appointed Actuaries

Willis Towers Watson India Private Limited Unitech Business Park, 2nd Floor

Tower-B, South City 1, Sector 41 Gurgaon-122002

India.

Lawyers

The Legal Department John Keells Holdings PLC

117, Sir Chittampalam A Gardiner Mawatha,

Colombo 2.

Bankers

Sampath Bank PLC Nations Trust Bank PLC Union Bank Colombo PLC Seylan Bank PLC

Pan Asia Banking Corporation PLC Bank of Ceylon

Commercial Bank of Ceylon PLC Deutsche Bank AG

DFCC Bank PLC

Hatton National Bank PLC Housing Development Finance Corporation

National Development Bank PLC National Savings Bank

People's Bank

Standard Chartered Bank

Reinsurance Panel

RGA

Hannover Re Munich Re Partner Re

Registered Office of the Company

20, St Michael's Road, Colombo 3.

Investor Relations

All investor queries should be directed to;

Investor relations hotline 011-2990314

e-mail: investorrelations@unionassurance.com



Union Assurance PLC

20, St. Michael's Road, Colombo 03, Sri Lanka.

+94 11 2990990

https://www.unionassurance.com

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