AIA CEO Shah Rouf (centre) with Deputy CEO Upul Wijesinghe (right) and Head of Marketing Suren Perera – Pic by Lasantha Kumara
By Charumini de Silva
AIA Sri Lanka Plc on Friday said it hoped to reinvest proceeds from the sale of its general insurance subsidiary to further boost life insurance business in the country.
The company has agreed to sell its general insurance subsidiary to Janashakthi Insurance for Rs. 3.2 billion.
Responding to questions on the company’s plans following the sale, AIA Sri Lanka CEO Shah Rouf said that it was something for the shareholders to decide.
“Our shareholders will look at an organic growth in the life insurance business in Sri Lanka, thereby the shareholders will soon decide on the funds,” he added.
However, he said that it would be re-invested in areas of growing their business and growing insurance penetration levels in Sri Lanka.
In its filing to the CSE on the proposed sale, AIA said the divestiture would enable it to fully focus its resources on its existing core business of life insurance in Sri Lanka in accordance with the vision of the AIA Group to be the pre-eminent life insurance provide in the Asia Pacific region.
The company enjoyed a life insurance market share of 16.3% in terms of Gross Written Premium (GWP) in 2014.
Capitalising on the vast under-served life insurance market in Sri Lanka, AIA said it was set to bring in its global expertise to increase life insurance penetration in the country.
Noting that Sri Lanka’s life insurance penetration levels were very low, Rouf said that being the second largest life insurer in the world, the company would help take penetration levels into much higher numbers in the next three years.
“Being part of the AIA Group, we have seen how markets evolve in different markets and with our expertise we are committed to grow and prosper in the life insurance segment in Sri Lanka,” he added.
“Overtime we hope that Sri Lanka will grow not just in new businesses, but for some of the other Key Performance Indicators (KPIs) in life insurance that are used in other markets. We are very pleased how we are performing in Sri Lanka and happy about the way that Sri Lanka is performing compared to the rest of the Asian countries,” he noted.
Rouf also said that they believed they had one of the best bancassurance products in Asia Pacific and intended to apply them in Sri Lanka’s market as well.
“We have wonderful long-term partnerships with a number of banks in Sri Lanka and we hope to take them to the next level. We will focus our strategy on realising the significant growth opportunities the life insurance market has in Sri Lanka,” Rouf said.
Commenting on the segregation of life and general insurance from companies, he said that the industry had taken it on a positive way. “The split of composite companies is expected to promote greater focus, transparency, policyholder protection and visibility on profitability,” he added.
Notably, AIA was the first company to comply with the segregation requirement, which AIA views as a progressive move by the regulator.
AIA Deputy CEO Upul Wijesinghe said as economic landscapes and the disposal income of people improving significantly, life insurance sector has much potential for development.
“Being the second largest life insurer in the world, we are very competent in product development. A new product line-up is expected focusing on life, pension and health insurance areas in the near future,” he said.
Wijesinghe asserted that the company expected significant growth in the business within the next three years.
“We are really expecting Sri Lanka to take off soon. With the new Government change, the more it opens up to the markets, we will also grow with that momentum,” he added.
The company said the proposed sale did not constitute a major transaction as per the Companies Act and hence shareholder approval was not required. However the Board in pursuance of its commitment towards good governance and transparency approved the proposed sale subject to obtaining the approval of shareholders. It will shortly issue notice convening an EGM.