Fitch Ratings has affirmed Sri Lanka Insurance Corporation Limited’s (SLIC) Insurer Financial Strength rating (IFS) at ‘BB-’ with a Stable Outlook. The agency has also affirmed the National Insurer Financial Strength Rating and National Long-Term Rating at ‘AA(lka)’ with Stable Outlook.
KEY RATING DRIVERS
SLIC’s ratings reflect its well-established franchise and market position in Sri Lanka, 99.9% state ownership, and its importance to the government as the largest state-owned insurer.
SLIC’s profit retention dropped to 38% in 2014 (2013: 78%) due to higher dividends to the government. In 2014, total comprehensive income increased to LKR14.9bn (2013: LKR7.5bn) driven mainly by fair-value gains in available-for-sale financial assets (LKR11.2bn in 2014 and LKR2.8bn in 2013). Net profit in the non-life segment dropped to LKR1.65bn in 2014 (2013: 2.9bn) due to poor underwriting results. This stemmed mainly from a one-time increase in provisions for third-party motor claims.