General Insurance:

Janashakthi to increase market share

by Rohana Jayalal

Janashakthi Insurance PLC will take full control of AIA General Insurance Lanka Ltd at a cost of Rs. 3.2 billion by purchasing a 100 percent stake of the insurance company, Managing Director, Janashakthi Insurance PLC, Prakash Schaffter told media at the Cinnamon Grand Hotel.

He said that Rs. 3.35 billion raised from a recent rights issue will be used for this investment, adding that the company is open for more investments.

The transaction is subject to customary closing conditions including regulatory and transactional approvals and is expected to be closed soon. AIA General Insurance Lanka Ltd is a fully owned subsidiary of AIA Insurance Lanka PLC.

Founder, Janashakthi Insurance PLC, C. T. A. Schaffter said, "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. The acquisition is expected to increase market share by 6.5 percent to 17.5 percent of the general insurance business in the country."

The Janashakthi Group being the third largest insurer has the expertise to handle mergers and acquisitions.

The group hopes to grow through the process, he said.

Chief Executive Officer, Janasakthi Insurance PLC, Jude Fernando said, "The amalgamation of the two entities will be a smooth one as this is not the first buy out by us. Janasakthi Insurance, set up in 1994, bought the National Insurance Corporation, a State-owned insurer, in 2001."

AIA Sri Lanka PLC has informed the Colombo Stock Exchange that subject to shareholder approvals, it would divest its fully owned general insurance subsidiary AIA General Insurance Lanka Limited to Janashakthi Insurance PLC.

A senior official of the company said the company will continue to focus its strategy on realising the significant growth opportunities in the Sri Lankan life insurance market.

He said the AIA Group's vision is to be the pre-eminent life insurance provider in the Asia-Pacific region and AIA Sri Lanka is fully committed to this.

The insurance company has expanded its branch network setting up 52 branch offices.