Online edition of Daily News

From left Ms. Anila De Soysa Director PERC. C. T. A. Schaffter, Managing Director NIC, Deepal Gunaratne Director General PERC and Tryphon R. Mirando, Executive Director NIC.

Janashakthi Insurance Company Limited (JICL) said that they have bought the remaining 39% of the National Insurance Corporation Ltd for Rs. 287.5 million and with that now they have the full control of the NICL. In June last year JICL acquired 51% stake of NICL for Rs. 450 million.

The government continued to retain 49% inclusive of 10% share holding of the NICL employees. Following the initial acquisition, Janashakthi bought almost the entire employee share holding as well. The agreement was signed between PERC and JICL at the Government Treasury recently.

NICL commenced business in 1980 as a solely government owned corporation, and was run under the Principal Agency system with eight Principal Agents. It flourished for several years despite the serious setbacks brought on by the 1983 riots.

In 1984 its non-Life business exceeded that of its only competitor the Insurance Corporation of Sri Lanka and posed a serious threat to the Insurance Corporation. Tragedy however struck it in 1987 with the establishment of Private Companies, and with the exodus of its Principal Agents - each to seek its fortune in the world of private enterprise.

NICL however, by the time of the acquisition in June 2001 by Janashakthi, had around 100,000 customers served by 725 employees, 800 agents and 30 branches in popular provincial towns, due to a stimulated growth since 1994. At the time of the initial acquisition, JICL saw that even though the financial results of NICL were not very impressive at that point, there was great potential for increased earnings and value addition. The belief was that if the synergies between the two entities were effectively harnessed, stakeholder value could be substantially enhanced.

Added to this NICL had an existing market share equal to JICL, providing an excellent opportunity to expand. The obtaining of full control of NICL provides further scope for growth and improvement in all insurance related activities carried out by both companies JICl said that these two companies will be amalgamated.

Now, over one year after the initial acquisition, NICL witnessed improvements in the profit base and the better financial results gained through cost cutting ventures and rationalisation.

C. T. A. Schaffter, the Managing Director said "the combined agency forces of JICL and NICL are also substantial and their widespread distribution channels would be catalyst in reaching more people with a full range of innovative insurance products and services."

After the transaction, Janashakthi said that they are not making any immediate changes to the existing Board of Directors of NICL which comprises Chairman Nissanka Wijewardena, Managing Director C. T. A. Schaffter, Executive Directors Prakash Schaffter, Tryphon R. Mirando, W. T. Ellawala and L. C. R. De C. Wijethunga.

JICL has also given a firm undertaking, that the existing staff of NICL would not be deprived of their jobs in spite of the merging of the two companies.

"The issue is not the actual numbers but how you manage and make them productive to drive an organisation to be innovative, add value and be profitable," Director and General Manager of JICL Prakash Schaffter said.

Apart from maintaining an exceptional annual growth rate since its inception in 1994, Janashakthi is the first and only insurance company to be awarded the ISO 9002 certification from the Bureau Veritas Quality International UK, for Life Insurance. Janashakthi has achieved another milestone to its credit by boosting its premium income to over Rs. 1 billion in the financial year ended December 31, 2001. The agreement was signed at the Treasury.