Fitch upgrades 4 SL Insurers’ National IFS Ratings

Fitch Ratings has upgraded the National Insurer Financial Strength (IFS) Ratings of four Sri Lankan insurers following the recent sovereign upgrade and recalibration of the agency’s Sri Lankan national rating scale. At the same time, Fitch has affirmed the National IFS of three Sri Lankan insurers.

The recalibration reflects changes in the relative creditworthiness of Sri Lankan issuers after Fitch upgraded Sri Lanka’s Long-Term Local-Currency Issuer Default Rating (IDR) to ‘CCC+’ from ‘CCC-’ on December 20, 2024. Fitch typically does not assign Outlooks to sovereigns with a rating of ‘CCC+’ or below.

National scale ratings are a risk ranking of issuers in a particular market designed to help local investors differentiate risk. Sri Lanka’s national scale ratings are denoted by the unique identifier ‘(lka)’. Fitch adds this identifier to reflect the unique nature of the Sri Lankan national scale.

“We believe the sovereign’s credit profile improvement has alleviated the investment and liquidity risks of insurers. The investment and liquidity risk profiles of Sri Lankan insurers are closely linked with that of the sovereign and banks as their investment portfolios are dominated by local-currency fixed-income securities issued by the government, corporate debt and deposits with financial institutions,” Fitch said.

The following insurers were upgraded: 1. Continental Insurance Lanka Limited (CILL) to ‘A(lka)’/Positive from ‘A-(lka)’/Positive 2. People’s Insurance PLC to ‘A(lka)’/Stable from ‘A-(lka)’/Stable 3. HNB Assurance PLC to ‘A(lka)’/Stable from ‘A-(lka)’/Stable 4. HNB General Insurance Limited to ‘A(lka)’/Stable from ‘A-(lka)’/Stable.

Fitch has also affirmed the National IFS Ratings of the following insurers: A. National Insurance Trust Fund Board (NITF) at ‘BBB(lka)’/Stable B. Co-operative Insurance Company PLC (CICPLC) at ‘BB(lka)’/Stable C. Construction Guarantee Fund (CGF) at ‘BB(lka)’/Stable.

Source: Daily News