Harry J pumps Rs. 250 m more capital into Continental Insurance

Monday, 4 August 2014 01:00 - - {{hitsCtrl.values.hits}}

Distilleries Company has infused Rs. 250 million in fresh capital into its fully-owned subsidiary Continental Insurance Lanka Ltd., in a vote of confidence on the industry’s prospects. The infusion of additional capital bringing the total at Continental Insurance to Rs. 750 million by business tycoon Harry Jayawardena-controlled entity comes in the midst of a separate move by premier blue chip John Keells Holdings (JKH) announcing plans to divest control of its General insurance business via Union Assurance Plc, as well planned exit from Sri Lanka General insurance market by global giant AIG. The minimum capital requirement per class of insurance business is Rs. 500 million but the move by Jayawardena to infuse a further Rs. 250 million, according to industry sources, reflects the Group’s confidence in the prospects of overall insurance industry as well as aggressive strategy to win more business. Continental is one of the six General insurance companies in the market.

JKH last week announced that it has signed a MOU with Fairfax Asia to divest 78% ownership of the General insurance business of its composite insurance subsidiary Union Assurance Plc. Based on the projected financial statements of UAL as at 31 December 2014, and for the purpose of this transaction, the overall valuation of the General insurance business of UAL has been estimated at approximately Rs. 4.5 billion. The deal will be done following the completion of the segregation of the UAL’s General and Life insurance business under a scheme of arrangement. Despite the sale of control in general insurance business, JKH said UAL will continue to retain ownership of the Life insurance business in its entirety. Recently AIG announced it will exit from Sri Lanka’s General insurance market. The overall Gross Written Premium (GWP) Income for General Insurance businesses in 2013 amounted to Rs. 53.17 billion up by 7% from 2012. On the other hand the GWP income of the Long-Term insurance (Life) grew by 10.2% to Rs. 41.3 billion. Industry regulator Insurance Board of Sri Lanka is preparing a new regime of risk based capital as well. The insurance industry had 21 companies operating as at 31 December 2013. Of that 12 are composite companies (dealing in both General and Long-Term insurance businesses), six companies carry on General insurance business and three carry on only Long-Term (Life) insurance business. Continental styles itself as one of the fastest-growing insurance companies in Sri Lanka and has been instrumental in providing innovative insurance products to the market. It offers tailor made insurance products for both personal and business requirements.