Distilleries Company, the island's top alcohol producer, said it sought regulator clearance to launch an insurance company with a start-up capital of 500 million rupees after losing control of a former state-owned insurance company.

Distilleries Company had said that it is willing to increase the investment provision to a billion rupees if necessary.

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.

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 Distilleries group to purchase SLIC, could keep the profits earned during the time they ran the firm.