Fitch upgrades Sri Lanka Insurance Corp's outlook to stable
Feb 14, 2017 16:48 PM GMT+0530 | 0 Comment(s)
ECONOMYNEXT – Fitch Ratings said it has revised the outlook on Sri Lanka Insurance Corporation's (SLIC) Insurer Financial Strength (IFS) rating to stable from negative, and confirmed the IFS rating at 'B+'.
The rating action follows the revision of the outlook on Sri Lanka's Long-Term Local-Currency Issuer Default Rating (IDR) to stable from negative and the confirmation of the rating at 'B+' on 9 Feburary 2017, a statement said.
SLIC's IFS rating is constrained by Sri Lanka's Long-Term Local-Currency IDR and the Negative Outlook reflects the Negative Outlook on Sri Lanka's IDR, it said.
The rating review does not include SLIC's 'AA(lka)' National Long-Term Rating and 'AA(lka)' National IFS rating.
Fitch said SLIC's ratings reflect its established franchise and market position in Sri Lanka, 99.9%-state ownership and importance to the government as the largest state-owned insurer.
“Offsetting these strengths are significant investments in non-core subsidiaries and a high equity exposure, which weighs on its risk-based capital,” it said.
If the sovereign ratings are upgraded in the future, and the constraints on SLIC's IFS rating are relieved, Fitch said it would take similar rating action on SLIC's IFS rating.
Conversely, a downgrade of Sri Lanka's ratings will lead to downgrade of SLIC's IFS rating.
Fitch said the IFS rating may also be downgraded if there is:
- Significant weakening in SLIC's market position.
- Deterioration in the non-life combined ratio to above 100% on a sustained basis.
- Weakening in SLIC's importance to the government, increased pressure from the state for higher dividend
payouts or a significant increase in non-core investments.
(COLOMBO, Feb 14, 2017)