Softlogic to sell 38% stake in AAI

By Sanjeevi Jayasuriya

Asian Alliance Insurance (AAI) will sell a 38 percent stake for a consideration of Rs 1.8 b to Germany’s DEG and Netherland's state owned development bank FMO. Over 95 percent of the AAI is controlled by the Softlogic Group, Sri Lanka’s diversified conglomerate.

Ashok Pathirage

“The Rs 1.8 b transaction at Rs 128 per share will take place through the Colombo Stock Exchange and is expected to be completed by early January next year with both parties holding an equal 19 percent stake in the company.This partnership will be of tremendous benefit to all stakeholders, as it will enable AAI to access international expertise and strategy,” Softlogic Group and AAI Chairman Ashok Pathirage said.

“We are delighted to welcome DEG and FMO into a partnership that will create a comprehensive insurance proposition as Sri Lanka confidently moves towards a $ 4,000 per capita income by 2016. This will provide significant opportunities in the insurance arena,” he said.

The upward movement of disposable income will increase the affordability to buy an insurance portfolio and this is an ideal situation for the insurance companies to pitch in.

The low penetration level also enables business growth while insurance becomes a security net for the elderly population.

DEG which is headquartered in Cologne, Germany is a subsidiary of KfW and one of the largest European development finance institutions for long term projects and company financing.

“We are convinced that Sri Lanka has immense scope and feel that the insurance industry has great prospects in the medium term. We expect the strong economy to deliver higher disposable income that in turn will lead to significant demand for financial services, including insurance,” Member of DEG’s Management Board, Michael Bornmann said. CEO, FMO, Nanno Kleiterp said that they are pleased to be part of this financing enabling further growth of life insurance penetration in Sri Lanka.

“We look forward to continue our relationship with Softlogic Group in creating opportunities for financial sector products and services that will facilitate sustainable and inclusive growth,” he said.

AAI commenced operations in 1991 and is one of the market leaders in the insurance industry at present.