Sunday Mar 01, 2026
Sunday Mar 01, 2026
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Sanasa Life Insurance Company PLC yesterday said it will proceed with raising up to Rs. 500 million through a private placement of unrated, unlisted, unsecured, Tier 2 redeemable, cumulative subordinated debentures, as part of a broader capital restoration plan aimed at meeting regulatory solvency requirements.
The Board, by resolution dated 27 January 2026, approved the issuance of up to five million debentures at Rs. 100 each, carrying an interest rate of 12.50% per annum. The issue will be made to identified investors and is intended to qualify as Tier II capital, subject to concurrence from the Insurance Regulatory Commission of Sri Lanka (IRCSL).
The company’s licence to carry on long-term insurance business was suspended by the IRCSL from 5 December 2025 due to, among other matters, failure to meet the Capital Adequacy Ratio (CAR) requirement under the Solvency Margin (Risk Based Capital) Rules 2015.
Under the proposed structure, funds raised through the debenture issue will be invested in Treasury Bills and Treasury Bonds issued by the Government of Sri Lanka and held in escrow with a licensed commercial bank. The securities will remain in escrow until the suspension of the licence is lifted following completion of remedial measures within a 24-week timeframe. If the suspension is not lifted within that period, the escrow agent is required to liquidate the Government Securities and return the proceeds, together with coupon payments, to investors proportionate to their investments.
The debentures will carry a lock-in clause restricting payment of interest and/or principal if such payment would cause the Company’s CAR to fall below the minimum regulatory threshold. The issue is exempt from the rating requirement under SEC Circular No. 16/2008 and will not carry a credit rating.
The proposed debenture issue forms the second leg of Sanasa Life’s capital enhancement programme. Earlier this month, the company announced a Rights Issue to raise approximately Rs. 522.67 million through the issue of 52.2 million new ordinary shares at Rs. 10 each, on the basis of one new share for every two shares held. The equity infusion is intended to strengthen the solvency margin, although the Company stated that the Rights Issue alone would not be sufficient to meet the required threshold.
Together, the equity raise and the proposed Tier 2 debenture issue are expected to support restoration of the Company’s CAR and facilitate reinstatement of its long-term insurance licence, subject to regulatory approval.
