Allianz strikes €86m Sri Lankan M&A deal for Asia growth

Allianz has agreed to acquire Sri Lanka's Janashakthi General Insurance (JGIL) for 16.4 billion Sri Lankan rupees (€85.9 million), according to a Feb. 2 press release.

The company said that Janashakthi’s general insurance portfolio complements Allianz Lanka’s existing business, and represents a strategic fit across both corporate and retail lines.

The transaction is part of Allianz’s strategy to achieve market leadership position and high-quality growth in the Asia Pacific region. It allows Janashakthi Insurance to focus on its life insurance portfolio in order to strengthen its presence in the Sri Lankan life insurance industry.

The acquisition also strengthens Allianz Insurance Lanka’s (Allianz Lanka’s) customer reach and service capabilities with close to a million policyholders island-wide, making it one of the country’s largest general insurers with a market share of approximately 20 percent.

The company said that the consideration represents a multiple of 2.2x JGIL’s adjusted net asset value in 2017. Janashakthi Insurance has been operating in Sri Lanka for over 23 years with a focus on motor, fire and health protection for individuals and corporates.

“This transaction provides a highly attractive opportunity to transform our market presence in Sri Lanka, while accelerating our growth agenda in the Asia Pacific region," said George Sartorel, Allianz’s regional CEO for Asia Pacific. "We are greatly impressed with the JGIL team, and believe the expanded business provides a strong foundation from which to drive continued innovation and excellence for our customers.”

The Sri Lankan general insurance market has posted a compound annual growth rate (CAGR) of 12.1 percent between 2010-2016 1. This is expected to accelerate to 12.5 percent by 2020, driven by improving trade and macro-economic conditions, as well as increased insurance penetration.

The transaction is subject to regulatory approval and is expected to complete in the first quarter of 2018.

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