The IBSL requested composites to split their life and non-life businesses by February 2015. Except, Sri Lanka Insurance Corporation Ltd, MBSL Insurance Company Ltd, LOLC Insurance Company Ltd and Seemasahitha Sanasa Rakshana Samagama, all other eight composite insurance companies have fulfilled our deadlines, she said.
"Remaining companies ask further time for their segregations. We are closely mongering their progress," she remarked.
When contacted, Chairman of the government- owned Sri Lanka Insurance Corporation Ltd , Hemaka Amarasuriya said that the company was waiting for government's final decisions to implement this segregation decision.
"We have to obey the regulatory decisions. We hope that the government will respond to this before end of this year, and also stock market listing of the SLICL is not government policy," he said.
Meanwhile, the latest Fitch Rating insurance sector report highlighted that the split was expected to provide greater focus and promote efficient use of capital, in the medium and long term. In the short term the credit profiles of some of the smaller players could be affected depending on factors such as ownership structures and the split of existing capital and growth.
Some regulator-approved post-split structures include: a holding company with two subsidiaries life and non-life; or the life business is placed in the holding company with a subsidiary...
incorporated for non-life. Regardless of the structure, many companies have opted to retain the long-tail, life business in the existing company and move the non-life business to a newly incorporated company.
Fitch expects post-split operational issues to be minimal for established companies, as they have previously operated with a quasi-separation between the two segments.
The IBSL has allowed shared services in some functions including actuarial, legal, finance and IT to ease the process of splitting and minimize immediate cost escalations from the split.
Fitch expects all regulatory changes underway (split, risk-based capital and listing) to promote consolidation due to the higher compliance and administrative costs.
The Insurance Board of Sri Lanka is expected to release their year 2014 annual report within few weeks.
There were some ownership changes in insurance companies in 2014. John Keels Holdings PLC, the parent company of Union Assurance Ltd (fourth largest insurer by assets) announced its intention to divest 78% of its non-life business to Fairfax Asia Limited, an international company. AIG Insurance, which held less than 1% of non-life market share, has exited the market, citing a lack of fit of the local operation with the group's strategic growth plans.