Janashakthi Insurance says in talks to divest general insurance arm

Schaffter family controlled Janashakthi Insurance PLC (JINS) yesterday confirmed market speculations that they were in talks to sell their general insurance business carried out by fully owned subsidiary Janashakthi General Insurance Limited.

“The terms of the sale are yet in the final stages of negotiation. The transaction will also be subject to the approval of Janashakthi Insurance PLC shareholders by way of a special resolution being a major transaction,” JINS said in a stock exchange filing. 

The trading of JINS shares was halted yesterday morning pending this announcement.  Market sources speculate that the buyer is a foreign insurance company, which has a relatively low-key operation in Sri Lanka.  JINS also said its director board has agreed to implement a share buyback following the sale of Janashakthi General Insurance—most likely to efficiently distribute the sale proceeds among JINS shareholders. 

“The final terms of the repurchase will be based on the terms of sale of Janashakthi General Insurance Limited,” the filing said.

Over 23 million JINS shares changed hands on Tuesday at elevated prices, two days before the yesterday’s announcement. The share was up 18 percent to Rs.20. JINS share last traded above Rs.20 in August 2015. 

Yesterday, the share rose 9 percent or Rs.1.80 to close at Rs.21.80 with over 7.8 million shares changing hands, generating turnover of Rs.172.2 million.  JINS has 544.5 million shares in issue and as at September 30, 2017, the group net asset value per share stood at Rs.16.67. JINS bought the general insurance business of AIA insurance Lanka PLC in 2015 for Rs.3.2 billion and merged it with its own general insurance operations to become the third largest general insurer in the country.