MBSL to exit insurance business with sale of 54% stake in subsidiary

Monday, 15 July 2024 02:35 - - {{hitsCtrl.values.hits}}

Merchant Bank of Sri Lanka & Finance PLC (MBSL) is to sell its entire holding of 53.81% in its insurance subsidiary.

A decision to this effect was made by the MBSL Board on Friday.

MBSL said the proposed sale will be subject to obtaining the necessary regulatory approvals from the Insurance Regulatory Commission of Sri Lanka and Central Bank of Sri Lanka and compliance with procedural steps in the Shareholders Agreement between the shareholders of MBSL Insurance Company Ltd., which was set up in 2004.

At the end of 2023, MBSL Insurance (MBSLI), had assets worth Rs. 2.57 billion and liabilities of Rs. 1.6 billion. In MBSL’s 2023 Annual Report, the investment in MBSL Insurance is stated as Rs. 1 billion (cost) and Rs. 352.7 million (fair value), up from Rs. 257.6 million in FY22.

In FY23, it posted a net operating income of Rs. 433.6 million down from Rs. 443.2 million in FY22. Profit before income was a negative Rs. 8.1 million as against a profit of Rs. 28.7 million whilst after tax loss in FY23 was Rs. 8.1 million in comparison to a profit of Rs. 33.7 million.

The subsidiary MBSLI has met the minimum regulatory ‘Total Available Capital’ (TAC) to carry out general insurance business as at 31 December 2023. The Life Insurance business operates with a deficit of TAC as of 31 December 2023, however, no new Life Insurance policies are underwritten by the company and taken measures to comply with the requirement stipulated by the Insurance Regulator, IRCSL.

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