InsureMe Insurance Brokers PLC Financial Summary and Investment Analysis

Executive Overview

InsureMe Insurance Brokers PLC is a technology-enabled insurance intermediary operating in Sri Lanka. The Company, along with its wholly owned subsidiary Digital Services Global (Pvt) Ltd, provides a digital-first insurance aggregator platform and develops proprietary InsurTech solutions (such as workflow automation and digital claims management) for corporate clients, financial institutions, and insurance companies. InsureMe Insurance Brokers PLC recently became the first insurance broker to list on the Empower Board of the Colombo Stock Exchange. Supported by the relaxation of vehicle import restrictions and strong growth in its life insurance segment, the Company has demonstrated substantial top-line expansion, while its subsidiary is actively pursuing regional expansion in the Asia-Pacific and MENA regions.

Key periods covered: 12 months ending Q1 2023 to 3 months ending Q2 2026 (Calendar Years).

Financial Performance

Revenue and Profitability Trends

Analysis:

• Revenue Growth: The Company recorded a robust 40.0% year-over-year revenue growth for the 12 months ending Q1 2026. This was primarily driven by a 97.5% surge in the Life Insurance segment’s Gross Written Premium (GWP) and a 17.4% growth in General Insurance GWP. The momentum continued into the 3 months ending Q2 2026 with a 34% year-over-year revenue increase.
• Profitability & Margins: Gross profit margins recovered from 39.4% in the 12 months ending Q1 2025 to 44.35% in the 12 months ending Q1 2026 due to a favorable shift in the business mix toward higher-margin Life Insurance and Reinsurance segments.
• Non-Recurring Items: The massive 551% surge in Net Profit for the 12 months ending Q1 2026 (Rs. 78.75 Mn) was significantly influenced by a one-off non-operating gain of Rs. 56.59 Mn. This gain resulted from the reversal of revenue share obligations following the mutual termination of an agreement with a major telecommunications partner. Excluding this non-recurring item, underlying operational profitability remains stable but substantially lower than the headline net profit figure.

Balance Sheet Analysis

Analysis:

• Asset Growth: Total assets expanded by 43.6% in the 12 months ending Q1 2026. This was driven by higher trade receivables (reflecting increased business volumes), increased short-term deposits from surplus cash, and capitalization of software development costs for proprietary tech platforms. Furthermore, the Company recognized a Right-of-Use (ROU) asset of Rs. 70.3 Mn for its new head office lease.
• Liabilities & Solvency: Total liabilities grew by 34.3% in the 12 months ending Q1 2026, predominantly due to the recognition of lease liabilities (Rs. 65.9 Mn). Trade and other payables saw a reduction due to improved working capital management and the reversal of the aforementioned revenue share liability.
• Equity: The Company’s equity base strengthened by 54.2% in the 12 months ending Q1 2026 entirely through retained earnings, as no new capital was raised and no dividends were paid. The Company operates without traditional long-term debt financing, relying purely on equity and lease liabilities.

Cash Flow Analysis

Analysis:

• Operating Cash Flow: Net cash from operations improved consistently, demonstrating strong cash conversion despite the non-cash nature of the revenue share reversal gain in the 12 months ending Q1 2026.
• Investing Cash Flow: The Company continues to heavily reinvest its operating cash flow into the development of intangible assets (proprietary digital platforms) and fixed deposits. Capital expenditures for technology platforms reached Rs. 21.8 Mn in the 12 months ending Q1 2026.
• Financing Cash Flow: The Company saw a cash outflow in financing activities during recent periods solely due to lease liability repayments. The Company has elected not to pay dividends to support future growth initiatives.

Key Financial Ratios and Growth Indicators

Growth Indicators & Operational Highlights:

• Compound Annual Growth Rate (CAGR): The Company boasts a historical revenue CAGR of approximately 58.5% from its inception to Q1 2026.
• Market Share: Ranks as the 6th largest local insurance broker in Sri Lanka with a 4.7% overall market share, capturing 10.3% of the broker-driven Long-Term Insurance market and 4.1% of the General Insurance market.
• Digital Platforms: Digital Services Global (Pvt) Ltd maintains over 60,000 active users and processes over 250,000 digital transactions annually through platforms like DIGIEYE (remote inspection) and DIGIMED (medical claims automation).

Economic and Market Context

• Macroeconomic Rebound: Sri Lanka’s economy has stabilized, posting a real GDP growth rate of 5% in 2025. Inflation moderated to a stable 2.2% by Q1 2026, and interest rates remained accommodative.
• Industry Dynamics: The insurance sector saw robust growth (Long-term GWP +23.5%, General GWP +13.7%). The relaxation of vehicle import restrictions sharply increased new vehicle registrations (over 217,000 in late 2025), serving as a significant catalyst for motor insurance premiums.
• InsurTech Demand: Increased health risk awareness and the push for digital transformation are accelerating the adoption of independent, comparison-based advisory models in a market historically dominated by captive agency networks.

Future Potential and Outlook

• International Expansion: The technology subsidiary has commenced regional expansion, securing its first client in Singapore and actively pursuing clients in the Middle East and North Africa (MENA) and the wider Asia-Pacific regions. The Total Addressable Market (TAM) for claims automation in these regions is estimated at USD 4.2 Billion.
• Reinsurance Broking: Having obtained a reinsurance broking license in June 2025, the Company has launched this new vertical to capture commissions from international risk placements, further diversifying its revenue streams.
• Technological Integrations: Ongoing investments in Artificial Intelligence (AI), Machine Learning (ML), and Intelligent Context Recognition (ICR) aim to fully automate complex underwriting and claims workflows.

Risks and Challenges

• Contingent Tax Liability: The Department of Inland Revenue has issued assessments for the Social Security Contribution Levy (SSCL) amounting to Rs. 33.45 Mn (including penalties). The Company has filed formal appeals and considers the likelihood of an unfavorable outcome to be remote; however, it remains a material risk.
• Revenue Concentration & Regulatory Risk: The Company’s core broking revenues are highly sensitive to macroeconomic shifts (e.g., re-imposition of vehicle import bans) and changes to Insurance Regulatory Commission of Sri Lanka (IRCSL) regulations.
• Cybersecurity & Data Privacy: As an online aggregator and software provider processing sensitive medical and financial data, the Company faces substantial risks regarding cyberattacks, system outages, and data breaches.
• Subsidiary Profitability: Digital Services Global (Pvt) Ltd is currently in its growth phase, holding unutilized tax losses and relying heavily on successful international client acquisition to drive future profitability.

Shareholder and Corporate Information

• Public Listing: Listed on the Empower Board of the Colombo Stock Exchange on December 1, 2025, at a Reference Price of LKR 442.00 per share.
• Share Capital: The Stated Capital comprises 2,055,290 ordinary voting shares.
• Major Shareholders: The top shareholders include a prominent digital innovation fund holding 25.67%, alongside the co-founders who collectively hold the majority of the remaining equity.
• Public Float: The public holding is exceptionally low at 1.13% (23,132 shares) held by 282 shareholders, indicating a highly illiquid stock.
• Valuation Metrics: At the listing Reference Price of LKR 442.00, the Price-to-Earnings (P/E) multiple stands at approximately 11.5x (trailing EPS of 38.32) and the Price-to-Book Value (P/BV) is 4.1x (Net Assets per share of 107.46).

Investment Decision Indicators

Strengths:

• Proven historical revenue compounding and strong competitive positioning via an integrated digital aggregator platform.
• Asset-light, debt-free capital structure with excellent returns on equity.
• Beneficiary of the current easing of vehicle import restrictions, directly boosting core motor insurance revenues.
• Diversification into the high-margin Reinsurance Broking segment and international SaaS product commercialization.

Weaknesses:

• Net profit for the 12 months ending Q1 2026 was highly inflated by a one-off revenue share reversal; normalized operational earnings are lower.
• The extremely low public float (1.13%) severely limits secondary market trading liquidity.
• Uncertainty surrounding a material Rs. 33.45 Mn tax assessment dispute.

Opportunities and Threats:

• *Opportunities:* Broadening the B2B and B2B2C channels locally and exporting proprietary AI-driven InsurTech platforms into the lucrative APAC and MENA markets.
• *Threats:* Intense competition from traditional brokers adopting digital channels, international InsurTech entrants, and a high sensitivity to local economic contractions.

Overall Assessment Framework: Investors analyzing InsureMe Insurance Brokers PLC must weigh its impressive top-line growth trajectory and strong technological moat against the poor stock liquidity and the artificially inflated recent net profit figures.

• A Buy rationale would focus on the Company's successful transformation into an international InsurTech SaaS provider, capitalizing on the USD 4.2 Bn regional market potential and the immediate domestic boost from relaxed auto import bans.
• A Hold/Sell rationale would emphasize the lack of secondary market liquidity (1.13% float), the non-recurring nature of its 551% profit spike in Q1 2026, and the pending Rs. 33.45 Mn tax contingency that could negatively impact future cash reserves.