A total of 22 registered Insurers compete in terms of market share of which 12 are composites (Life Insurance and General Insurance). Ceylinco leads the Long term insurance business with Gross Written Premium (GWP) of Rs.10, 829mn with 26.93% market share (2013 IBSL Annual report). SLIC, AIA, UAL and Asian Alliance were able to secure top five positions in the
Life insurance penetration in Sri Lanka is currently 0.5% as a percentage of GDP (2013 data) which is very low compared to other countries in the region (India
3.10%). Hence, there is tremendous untapped potential in the life insurance business in Sri Lanka.
Per capita GDP in 2013 reached USD 3,280 compared to USD 2,922 in 2012, and is on its way up to reach UDS 4,000 by 2016. This improves the disposable
income level which can result in an increase in the life insurance penetration level in the industry.
See the following data comparison As on September 2014,
Union Assurance PLC - UAL.N0000 EPS 13.27 NAV (RS) 61.88 PE (X) 12.06 PBV (X) 2.59 price 160.00
Ceylinco Insurance PLC CINS.N0000 EPS (RS) 92.22 NAV(RS) 692.16 PE(X) 14.72 PBV(X) 1.96 price 1,357.00
Ceylinco Insurance PLC (X) CINS.X0000 EPS(RS) 92.22 NAV(RS) 692.16 PE(X) 5.75 PBV(X) 0.77 Price 530.00
AIA Insurance Lanka CTCE.N0000 EPS(RS) 18.78 NAV(RS) 157.78 PE(X) 16.13 PBV(X) 1.92 Price 302.90
Asian Alliance Insurance PLC AAIC.N000 EPS(RS) 27.01 NAV(RS) 68.68 PE(X) 5.48 PBV(X) 2.15 Price 147.90
Janashakthi Insurance PLC JINS.N0000 EPS (RS) 3.18 NAV (RS) 13.04 PE(X) 7.08 PBV(X) 1.7 price 22.50
HNB Assurance PLC HASU.N000 EPS(RS) 7.32 NAV(RS) 44.71 PE(X) 10.98 PBV(X) 1.80 price 80.40
Market leader Ceylinco insuarance & AIA insurance 14.72 & 16.13 of price earning ratio but AAIC TRADES ON 5.48 times PE .
Average sector PE should be ( 14.72+16.73) /2 = 15.72
AAIC should trade on 15.72/5.48 = 2.86 times
So market price should be = 2.86 X 147.90 = Rs.422.99
This is the scenario on 30.09.2014 but based on average growth in insurance sector 10% can be expected .
Price adjustment should be RS 465.289
As we awrae that 1 for 10 split ,
I strongly believe this should be traded nearly 50/- before ending this year .
AAIC has attractive ratios , 14 new branches opened recently with flexible insurance plans .
Best of luck .