11 December 2014 04:20 am Views - 2324
Listing out its objectives in seeking a listing on the secondary Diri Savi Board of the Colombo Stock Exchange (CSE), the Arpico Insurance prospectus noted, according to the Section 15A of the Regulation of Insurance, the company is required to list itself on the CSE on or before October 20, 2014. “We were the first to obtain the licence as an insurance facilitator from the amended act. It is a requirement an insurance company to issue its IPO after running for about three years,” Arpico Insurance CEO D.C. Kevitiyagala said.
Meanwhile, the company said Rs.74.74 million of the IPO proceeds will be used to beef up its risk-based capital (RBC) at the end of the year 2015 in meeting the Rs.500 million regulatory RBC requirement.
“As proposed by t he i nsurance industry regulator, the risk-based capital rule requires all insurers to maintain a capital of Rs.500 million going forward. Therefore, we intend to raise additional capital of Rs.74 million through the IPO to facilitate compliance,” Kevitiyagala said. With t he IPO proceeds, t he insurance company also expects to broaden its reach. Arpico Insurance plans in setting up 12 new branches by end-2015, thereby increasing its branch network to 31 from current 19.
The shareholding structure of the company’s post-IPO would be: Kegalle Plantations PLC with 40.29 percent, Richard Pieris Distributors (Pvt.) Ltd with 26.86 percent, Richard Pieris & Company PLC with 22.84 percent and the public with 10.01 percent.
For the nine months ended September 30, 2014, Arpico Insurance made a net loss of Rs.8.1 million with a gross written premium (GWP) of Rs.167.7 million. The total revenue stood at Rs.216.4 million.The company expects to achieve profits in 2015, its fourth year of operations, and targets Rs.1 billion GWP in 2017. According to Arpico Insurance Director Viville Perera, the company is estimated to achieve Rs.300 million of GWP by the end of this year.
According to CAL Research, an independent research body, Sri Lanka’s insurance sector is expected to be driven by the Life insurance business going forward. They forecast Life insurance GWP to hit US $ 663 million by 2018, which reflects a 16 percent compound annual growth rate (CAGR).
Sri Lanka’s Life insurance penetration remains woefully low at 0.5 percent.The IPO is scheduled to open today and the latest closing day would be December 31, 2014. The issue will be managed by Arpico Ataraxia Asset Management (Pvt.) Ltd.