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German-headqu-artered European financial services giant Allianz is to buy Janashakthi General Insurance Ltd.
Speculation was rife from late Tuesday about the impending transaction but Janashakthi Insurance Plc yesterday made a preliminary disclosure to the market without naming the ultimate buyer. In its filing to the CSE, Janashakthi said its Board authorised in principle a sale of all of the shares held by Janashakthi Insurance Plc in its wholly-owned subsidiary Janashakthi General Insurance Ltd. In terms of the sale are still in the final stages of negotiation, it added.
The transaction will be subject to the approval of the shareholders of Janashakthi Insurance Plc by way of a Special Resolution being a major transaction for the company.
It will also be subject to the satisfaction of the Insurance Regulatory Board that the transaction meets the regulatory criteria specified.
The Janashakthi Insurance Plc Board also said that it had agreed in principle that Janashakthi Insurance Plc will implement a substantial repurchase of its shares following the sale of Janashakthi General Insurance Ltd. The final terms of the repurchase will be based on the terms of sale of the general insurance subsidiary.
The Board expects that the agreements for the transaction will be finalised shortly and will make appropriate disclosures immediately after the completion of the transaction.
On Tuesday the share price of Janashakthi Insurance gained Rs. 3 to close at Rs. 20 after touching an intra-day high of Rs. 21 with 23.2 million shares changing hands. Pending the announcement yesterday trading was suspended briefly and thereafter it peaked to Rs. 23.20 before closing at Rs. 21.80, up by Rs. 1.80. This week the share price surpassed the previous 52-week highest price of Rs. 17. In contrast last week Janashakthi’s share price gained only 20 cents to close at Rs. 16.10.
Consolidation within the general insurance industry has become a rational strategy given the number of players, with 12 providing general insurance and a further three handling both.
Janashakthi itself a few years ago acquired the general insurance business of AIA whilst Fairfax acquired the general business of Union Assurance.
The insurance industry recorded a growth of 13.87% in terms of Gross Written Premium (GWP), during the first half of 2017. This growth is relatively lower than the growth experienced in the first half of 2016, i.e. 17.01%.
The GWP for the Long Term Insurance and General Insurance businesses was Rs. 76,162 million compared to the first six months of 2016 amounting to Rs. 66,886 million. The GWP of the Long-Term Insurance Business amounted to Rs. 33,657 million, up 11.6%, whilst the GWP of General Insurance Business amounted to Rs. 42,505 million, up 16.2% from the corresponding period of 2016.
An international financial services provider, Allianz serves some 86.3 million retail and corporate customers in 70 countriesthrough its more than 140,000employees.
In Sri Lanka Allianz offers Motor Insurance, Life Insurance, Travel Insurance, Marine Insurance, Liability Insurance, Fire Insurance and Title Insurance.
In the first nine months of 2017, Allianz Lanka continued to maintain its impressive performance across its General and Life businesses.
Allianz Insurance Lanka, the general insurance company, recorded Gross Written Premium (GWP) of Rs.3.92 billion during the period under review, a YoY growth of 30% over GWP of Rs.3.02 billion reported during the same period last year. This helped the business register pre-tax profits (PBT) of Rs.126.9 million, a marked increase over the PBT of Rs. 3 million at the end of 3Q 2016.
The Life Company registered an impressive growth of 18% in annualised new business premiums in 3Q 2017 with GWP growing by 13% YoY to Rs. 864 million. This allowed the business to report pre-tax profits (PBT) of Rs.68 million.
Allianz Lanka’s prudent investment strategy continued to help generate greater returns with the general insurance business witnessing a 38% growth in its investment portfolio and 27% YoY growth in investment income which stood at Rs.202 million at the end of the period under review. The Life Business’ investment portfolio grew by 39% YoY, from Rs. 1.9 billion to Rs. 2.6 billion, generating investment income of Rs.207 million, a YoY growth of 43%.
