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Domestic, Indian suitors woo insurer’s hand in second marriage
View(s):By Kapila Bandara
None has yet been shortlisted. Request for qualifications have closed.
The Finance Ministry’s State-Owned Enterprise Restructuring Unit said this week, Life Insurance Corporation (Lanka) Limited, Union Assurance Plc, and a consortium of Asiri Hospital Holdings Plc and Softlogic Life Insurance Plc have submitted bids for SLIC’s life business.
Union Assurance is 90% held by John Keells Holdings. In 2023, UA reported gross written premium of Rs. 18.9bn. Net income was Rs 3.75bn and profit before tax was Rs. 5.3bn.
Ashok Pathirage’s Asiri Hospital Holdings, in which Sri Lanka Insurance Corp Life Fund has a 0.65% interest, and where SLIC’s General Fund also has a 0.25% shareholding, is heading a consortium. The consortium includes Softlogic Life Insurance Plc., which has a 0.79% stake in Asiri Hospital Holdings. Among the company’s financial liabilities is net debt of Rs 15.87bn with a gearing ratio of 62%.
Parent Softlogic Holdings reported accumulated losses of Rs. 26.39bn as of March, 2022. Group liabilities exceed current assets by Rs. 45.85bn. Softlogic Holdings remains suspended from trading over uncertainty that may cast significant doubt on the group’s ability to continue as a going concern, the auditor noted.
Euro Exim Bank Ltd based in St. Lucia, and Fairfirst Insurance Ltd (Sri Lanka) are bidding for the general business.
Privately-held Euro Exim Bank information shows it provides “consultancy and management during issuance of letters of credit,’’ and is headed by executive chairman Kaushik Punjani, who is listed on UK’s Companies House as a British national. Average staff was 9 in the year ended March, 2023.
Fairfirst Insurance in a non-life insurer, under Toronto-based Fairfax Financial Holdings.
Life Insurance Corp (Lanka) is a joint-venture 86.49% owned by Life Insurance Corp of India, which is listed. Conglomerate Bartleet Group’s Bartleet Transcapital is the local partner, LIC India filings for 2022-2023 show. The company has sold 4,925 policies in 2022.
According to a financial filing online for the year ended 31 December 2022, and dated April 23, 2023, the auditor KPMG says LIC (Lanka) had accumulated losses of Rs 516.69 million. And cash flows are a negative Rs 636.22m. The company has not maintained total available capital of Rs 500m. KPMG Sri Lanka notes that “a material uncertainty exists that may cast substantial doubt on the company’s ability to continue as a going concern’’.
Profit in 2022 has plunged to Rs 31.75m from Rs 140.11m, the year before. The company has got a Rs 30.98 capital infusion in 2023, and total capital infusions of Rs 600m that year, after the reporting date, for which shares had been issued.
This is the second time a suitor is being sought for SLIC after a Rs 6bn sale in April, 2003 to a consortium involving Stassen Group founder Harry Jayawardena’s companies including Milford Holdings (Pvt) Ltd., was ruled illegal and invalid, and null and void ab initio (from the beginning), by the Supreme Court in 2009. Distilleries Company of Sri Lanka led the consortium.
The SC directed the Secretary to the Treasury to return the Rs 6bn and it has returned Rs. 5.71bn in 2010-11. But, Melstacorp has said it as initiated legal action to recover the profit from 11 April 2003 to 4 June 2009 in lieu of interest.
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