Sri Lanka alcohol producer to enter insurance business

Dec 10, 2009 (LBO) – Distilleries Company of Sri Lanka said it is seeking regulator clearance to launch an insurance company with a startup capital of 500 million rupees after losing control of a former state-owned insurance company. Distilleries shares opened Thursday trading at 96.00 rupees, after closing the previous day down 75 cents.

Distilleries Company said in a stock exchange filing that it is willing to increase the investment provision to a billion rupees if necessary.

The new insurance company will be a fully-owned unit of Distilleries.

In 2003 Distilleries acquired state-owned Sri Lanka Insurance Corporation (SLIC) in a privatisation deal.

But in June 2009 the Supreme Court reversed the sale, citing irregularities in the 6.0 billion rupee privatisation deal.

Court ordered the government to repay 6.0 billion rupees originally paid by the private firm to gain control of SLIC.

Alcohol producer Distilleries Company is a unit of the unlisted Stassens group controlled by tycoon Harry Jayawardena who also has large stakes in the listed Hatton National Bank, Commercial Bank and National Development Bank.

In June 2009, court said Milford Holdings, a special purpose company incorporated by the