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A total of 6.6 million shares will be issued, with Rs. 79.5 million to be raised upon full subscription.
The decision behind the IPO is threefold; firstly to fulfil a regulatory requirement of the IBSL, secondly to fulfil a requirement of the risk-based capital regime, and finally to fund an expansion plan of the company.
Of the funds raised, Rs. 31 million will be used for the expansion plan to open 12 new branches by the end of 2015 and widen its reach.
Richard Pieris Director Professor Lakshman R. Watawala spoke of the benefit of the IPO to the public saying, “While engaging in business we also want to ensure that a part of this success is also enjoyed by the public of this country.”
He also described how the company has not yet reached its full potential, saying “Arpico Insurance is still in its infancy. That’s why we see that there is a great future for this company.”
According to him, a large part of the untapped market for insurance remains in the rural and urban areas, which have not been focused on by other insurance companies. “This country is hardly being utilised in the Life insurance sector. Even though there are much larger companies that have built up over a period of time, they still have not been able to penetrate the rural areas and the urban areas so we will be looking at these areas.”
In its third year of operation, the organisation is said to be showing tremendous results in the insurance industry of Sri Lanka.
“Arpico Insurance started in 2012 with a new value proposition – insurance for the living. The company was able to set new standards in insurance with a record-breaking GWP of Rs. 100 million in the first year of operation. In the second year of operation the company made a GWP of Rs. 200 million and is targeting to surpass Rs. 340 million this year,” said Arpico Insurance Director Viville Perera.
Describing Arpico Insurance’s rapid growth, Professor Watawala said: “As a new company we have tremendous growth, a 300% growth from the first year to the third year. In the fourth, fifth and sixth year we will definitely have immense growth taking place in this company and there after we will be able to give the benefits that we derive from this company to our shareholders.”
Speaking of the valuation of the share, he said the shares being sold for Rs. 12 had in fact been valued at Rs. 16 per share. “The expert valuers valued the share at Rs. 16 but we are giving a bargain to our new customers.”
Arpico Ataraxia Vice President Tharanga Gamage spoke of future plans for the company, which includes reaching Rs. 1 billion GWP by 2017 and high retention rates by 2018. “Arpico Insurance hopes to earn profits in 2015. It is already on its way to achieving profits in 2015 in its third year of operation. In addition it hopes to hit a GWP of Rs. 1 billion in 2017 and have Rs. 1 billion in the Life fund by 2018. It also hopes to reach retention targets of 65% for the second year and 75% for the first year by 2018. Currently retention targets are on par with industry standards of 40-50%. It also hopes to increase the branch network and penetrate more into the market.”
