The financial transaction between Sri Lanka’s top insurance industry players, AIA Sri Lanka (AIA) and Janashakthi Insurance Plc (JINS) is expected to be completed after October 23, 2015 but on or before the end of this month, officials from the two companies said yesterday.
AIA Insurance Lanka PLC yesterday announced that it will divest its fully-owned general insurance subsidiary, AIA General Insurance Lanka Limited to JINS for a total consideration of Rs.3.2 billion.
On the other hand, JINS which also confirmed that it had signed an agreement to acquire the said entity, revealed that it would utilise funds raised via the upcoming Rs. 3.3bn Rights Issue (to be opened up for subscription at the Colombo Stock Exchange shortly) to finance the acquisition.
“The formal requirement of an industry wide segregation of life and general insurance businesses by the Insurance Board of Sri Lanka at the start of this year provided the backdrop for AIA’s decision. At the end of last year, we did a business review and decided to continue to focus our strategy on realising the significant growth opportunities in the Sri Lankan life insurance market given that AIA Group is the 2nd largest listed life insurer in the world,” AIA Sri Lanka’s Chief Executive Officer, Shah Rouf said explaining the rationale for the sale of its operations.
He said that since acquiring operations from Aviva NDB Insurance in September 2012, AIA Sri Lanka has made significant investments to expand its branch network with 52 new branch offices and established its partnership with Sri Lanka Cricket.
“Notably, AIA was the first company to comply with the segregation requirement, which AIA views as a progressive move by the regulator,” Rouf said at a press conference held at the Cinnamon Hotel in Colombo this evening.
Meanwhile, JINS which hosted a separate press conference said the transaction is subject to customary closing conditions including regulatory and transactional approvals and is expected to be closed by end of October 2015. According to officials connected with the transaction, AIA is set to hold an Extra Ordinary General Meeting on October 23 to receive formal approval from its shareholders after which payments will be made by JINS to AIA.
“We are keen on growing our business via Mergers and Acquisitions and we look forward to welcoming the 236 employees of AIA and to grow together as one. We also assure them that they will not be retrenched following the acquisition,” JINS Chairman, W T Ellawela told a press conference held at the Cinnamon Grand Hotel.
JISL Director Marketing Ramesh Schaffter who was also present at the briefing said he was certain that the amalgamation of the two entities will be a smooth one as this is not a first for JINS. JINS acquired National Insurance Corporation, a State owned insurer in 2001
“I have been in the insurance industry for over 60 years and I believe that the Sri Lankan insurance industry is moving towards a positive era. I am certain that there will be more voluntary consolidations taking place in the future and I am glad that Janashakthitook this giant step in strengthening its current position in the industry,” JINS Founder, C.T.A. Schaffter said.
Janashakthi General Insurance Limited is the third largest general insurer in Sri Lanka with an estimated Gross Written Premium of Rs. 7.5Bn (market share of approximately 11.4%).The combined business of the two entities will further strengthen Janashakthi’s position in the general insurance industry and accounts for a market share of approximately 17.5%.
AIA Group is the largest independent publicly listed pan-Asian life insurance group, with a presence in 18 markets in Asia-Pacific, including Sri Lanka. Established over 90 years ago, AIA is a market leader in the Asia-Pacific region (ex-Japan) based on life insurance premiums and holds leading positions across the majority of its markets.
AIA Group is the number 1 company in the world with the most number of Million Dollar Round Table (MDRT) members (3,752 as of 6 May 2015). MDRT is internationally recognised as the standard of excellence in the life insurance and financial services business.
Pics by Chandana Wijesinghe300