Global insurance giant American International Group (AIG) is closing business in Sri Lanka, the company said in a statement on Friday.
AIG was one of the 19 General insurance providers in the Sri Lankan market and its share (0.3 percent by end 2012) was insignificant.
This move has made industry analysts emphasize that AIG's exit won't have any impact in the market, though others noted post-war Sri Lanka was losing a valuable U.S. brand whose global revenue in 2013 was 69 billion U.S. dollars and has a customer base of 88 million.
"As AIG continues to streamline and simplify as an organization, we have been closely examining those business segments within those countries in which products and services are not meeting the needs of our customers or are not a current focus of AIG and may no longer fit into our strategic growth plans. After careful consideration and an in-depth review, we have decided to withdraw from the Sri Lanka market," the company said in a short statement released to media.
Sri Lanka's regulator Insurance Board of Sri Lanka (IBSL) has asked AIG to present written exit plans explaining its action regarding employees and policy holders.
Insurance penetration and density in Sri Lanka is relatively low in comparison to other Asian countries.
According to Central Bank data, insurance penetration, namely total premium as a percentage of Gross Domestic Product, was 1.14 percent in 2013.
AIG went to the brink of collapse in 2008 during the height of the financial crisis and required a bailout of 182 billion U.S. dollars.
Wall Street reported that in terms of employees and total assets, AIG is roughly half the size it was before the crisis, thanks largely to divestitures of two international Life insurance units and sales of numerous other businesses.
The company, with a market capitalization of almost 80 billion U.S. dollars, returned to profitability and in 2012 finished repaying taxpayers the aid it required in the bailout.
Employing over 64,000 people in more than 90 countries, AIG serves 98 percent of the Fortune 500 companies.