Flurry of listed insurance corporates soon
The Colombo Stock Market will soon see a flurry of listed insurance corporates with the Amendments to the Insurance Act No 43 of 2000 requiring unlisted insurance corporates to list, and also composite companies to segregate their businesses.
The segregation of the businesses for the composite companies will mean that the companies which will have both life and general insurance businesses separated and also listed.
There is a total of 19 insurance companies of which seven are listed. The seven listed insurance companies are, Ceylinco Insurance, Aviva NDB, Union Assurance, HNB Assurance, Amana Takaful and Janashakthi.
Some of the companies are already in negotiations towards the segregation prior to the listing, which is a mandatory legal requirement although there is no firm indication of a time frame as to when the segregation and listing would be implemented, Insurance Board of Sri Lanka’s Legal Director Damayanthi Fernando told Daily News Business yesterday.
Meanwhile, market sources said that the move will also be positive where it will also add transparency to these companies and also to the market akin to the Registered Finance Companies which were required by the Central Bank to list in the Colombo Stock
Meanwhile RAM Ratings Lanka in their Insurance Sector Update states that the Lankan insurance sector has been gradually recovering from the economic slump in 2008/09.
The life-insurance industry had picked up pace, recording a double-digit growth in premiums over the same period as opposed to the relative standstill a year earlier. Notably, the growth has been supported by the general improvement in macroeconomic conditions.
Going forward, RAM Ratings Lanka envisages the industry to keep up this positive trend, supported by more robust economic growth and greater penetration in the northern and eastern regions of the country.
The insurance sector accounted for a relatively small portion of the domestic financial industry, making up only 3.2 percent of the entire system’s financial assets as at end-December 2009. Moreover, the insurance penetration rate is also lower than those of other Asian countries, with total premiums per capita coming up to a mere USD30.10 as of end-December 2009 (end-December 2008: USD29.40). We observe that several new players entered the insurance arena last year. At the same time, the more established players have shifted from price-based competition to focus more on service quality.