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Monica Beek
Media Spokesperson
T: +31 70 314 9130
M.Beek@fmo.nl
On May 14th, FMO and DEG, together with their common investee company, Asian Alliance Insurance (AAI) organized a seminar on The Future of Insurance in Sri Lanka. AAI hosted the conference and put together an excellent program. FMO and DEG provided financial support for the organization of the conference and were key in getting together the speakers, which were insurance experts from throughout the region. The seminar was attended by over 200 insurance practitioners representing almost all of the insurance companies in Sri Lanka.
The day focused around the impact of a new law, which will require composite insurance companies to split into a Life insurance and a Non-life insurance company. The speakers were experts representing an insurance-focused private equity firm (Leapfrog), an actuarial consultant (Milliman), the Insurance Association of Sri Lanka, a tax expert (E&Y), a legal expert (Nithya Partners) and an accounting firm (KPMG). This meant that throughout the day, the impact of the new regulation was tackled from all possible angles, from the strategic/investor’s point of view to the legal and tax implications.
As explained by Mr Ramal Jasinghe, CEO of AAI in his opening speech, the idea originated some months ago while visiting the insurance regulator: “During a visit by FMO and DEG to the IBSL (Insurance Board of Sri Lanka), FMO questioned what we as investors could do to support the insurance sector in Sri Lanka. The result is the current seminar.”
Key note speaker was Mr Nivard Cabraal (Governor of Central Bank). He indicated that the growth potential of the Sri Lankan insurance sector is enormous, given the growth of the economy and the low level of insurance penetration. Insurance penetration -as measured by Gross Written Premium to GDP- is very low in Sri Lanka, standing at only 1.2% as compared to an average in Asia of 5.8%. This means that there is room for the industry to grow five times.
Speaking on the strategic implication of the split in Life and Non-life, Mr Stewart Langdon of Leapfrog Investments indicated that “the split will provide a golden opportunity to reset the dial of how the company operates and carefully look at the strategy, product design, and distribution channels.” Mr Johan Richters, the FMO-nominated Director at AAI explained that he “would think twice –or maybe even ten times- about abandoning one of the two business lines, given the growth potential of the market.”
The seminar comes at a very timely moment, since the split of the companies (and subsequent listing of both entities) is due by 2015. As worded by Mr Sanket Kawatkar of Milliman: “Given the fact that the split and listing are required by 2015, we should start today –in fact we should have started two years ago- with preparing ourselves for the requirement related to these changes.”
About FMO
FMO (the Netherlands Development Finance Company) is the Dutch development bank. FMO supports sustainable private sector growth in developing and emerging markets by investing in ambitious entrepreneurs. FMO believes a strong private sector leads to economic and social development, empowering people to employ their skills and improve their quality of life. FMO focuses on three sectors that have high development impact: financial institutions, energy, and agribusiness, food & water. With an investment portfolio of EUR 6.3 billion, FMO is one of the largest European bilateral private sector development banks.
About DEG
DEG (DEG - Deutsche Investitions und Entwicklungsgesellschaft mbH) is the German development finance institution and one of the largest European development finance institutions. DEG is a member of KfW Bankengruppe. For 50 years, DEG has been financing and structuring the investments of private companies in developing and emerging market countries. DEG’s aim is to establish and expand private enterprise structures in developing and emerging countries, and thus create the basis for sustainable economic growth and a lasting improvement in the living conditions of the local population.