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Friday November 13th, 2026

Sri Lanka Insurance, NITF local ratings cut two levels after sovereign downgrade

ECONOMYNEXT – Fitch Ratings has lowered the local Insurer Financial Strength (IFS) ratings of state-run Sri Lanka Insurance to ‘AA(lka)’ from ‘AAA(lka)’ and National Insurance Trust Fund Board to ‘A+(lka)’ from ‘AA-(lka)’.

Fitch has lowered the ratings of state-linked firms and others such as banks that had state assets after sovereign downgrades.

“SLIC’s National IFS Rating continues to mirror its ‘Favourable’ business profile, and capital position and financial performance that are better than that of the industry,” Fitch said.

“The rating also factors in the insurer’s high exposure to equity investments, non-core subsidiaries as well as sovereign-related investments, which increase its investment and asset risks due to the sovereign’s weakened credit profile.”

SLIC’s regulatory risk-based capital (RBC) ratios of 451 percent for its life and 203 percent for its non-life segments at end-1H20 were well above the industry averages and the 120 percent, regulatory minimum.

NITF’s RBC ratio temporarily increased to 519 percent by end-1H20 (end-2019: 263 percent) along with a temporary improvement in earnings, evident from a reduction in its combined ratio to 48 percent in 1H20 from 89 percent in 2019.

The full statement is reproduced below:

Fitch Revises Two Sri Lankan Insurers’ National IFS Ratings on National Scale Recalibration

Fri 22 Jan, 2021 – 00:55 ET

Fitch Ratings – Sydney/Colombo – 22 Jan 2021: Fitch Ratings has revised the National Insurance Financial Strength Ratings (IFS) of two Sri Lankan insurers following the recalibration of the agency’s Sri Lankan national rating scale. The recalibration reflects changes in the relative creditworthiness among Sri Lankan issuers, following Fitch’s downgrade of the country’s sovereign rating to ‘CCC’ from ‘B-‘ on 27 November 2020. For details, see “Fitch Ratings Recalibrates its Sri Lankan National Rating Scale”, dated 22 December 2020, at https://www.fitchratings.com/site/pr/10147729.

Rating revisions are used to modify ratings for reasons that are not related to changes in credit quality, but to reflect changes in the national rating scale.

The National IFS Ratings of the two Sri Lankan insurers were revised as follows:

– Sri Lanka Insurance Corporation Limited revised to ‘AA(lka)’/Stable from ‘AAA(lka)’/Stable.

– National Insurance Trust Fund Board revised to ‘A+(lka)’/Stable from ‘AA-(lka)’/Negative.

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.

National scales are not comparable with Fitch’s international rating scales or with other countries’ national rating scales. Other Sri Lankan insurers’ National IFS Ratings, which are not mentioned in this commentary, have not been affected by the recalibration exercise because, in our view, the rating relativities of these insurers are unaffected.

KEY RATING DRIVERS

Sri Lanka Insurance Corporation Limited (SLIC)

SLIC’s National IFS Rating continues to mirror its ‘Favourable’ business profile, and capital position and financial performance that are better than that of the industry.

The rating also factors in the insurer’s high exposure to equity investments, non-core subsidiaries as well as sovereign-related investments, which increase its investment and asset risks due to the sovereign’s weakened credit profile.

SLIC’s sovereign investment-to-capital ratio was 125% at end-1H20 (2019: 88%).

Fitch regards SLIC’s business profile as ‘Favourable’ compared with that of other Sri Lankan insurance companies due to its leading business franchise, participation in well-diversified and stable business lines, and large domestic operating scale. SLIC was Sri Lanka’s second-largest life and non-life insurer based on gross premiums in 2019.

SLIC’s regulatory risk-based capital (RBC) ratios of 451% for its life and 203% for its non-life segments at end-1H20 were well above the industry averages and the 120% regulatory minimum.

Fitch expects the potential pressure on earnings from rising price competition, fueled by constrained business growth and softer investment yields, to be somewhat mitigated by lower claims from motor insurance lines due to a drop in traffic accidents following the implementation of pandemic-related travel restrictions. SLIC has consistently maintained its non-life combined ratio below 100% (1H20: 96%; 2019: 95%) for the past five years, buoyed by its scale advantages and prudent underwriting practices.

National Insurance Trust Fund Board (NITF)

NITF’s National IFS Rating reflects its ‘Favourable’ business profile and strong financial performance. The positive factors are offset partly by its inconsistent risk-management practices, which in turn increase the volatility in its capital position and earnings.

NITF’s RBC ratio temporarily increased to 519% by end-1H20 (end-2019: 263%) along with a temporary improvement in earnings, evident from a reduction in its combined ratio to 48% in 1H20 from 89% in 2019.

The improvements were due mainly to increased premium retention and reduced claims during the pandemic-induced lockdown. Fitch believes the insurer’s capitalisation and earnings will normalise in the medium term due to a gradual pick-up in claims and the renewal of its reinsurance arrangements, which will reduce NITF’s premium retention.

Fitch expects the large payment of levies to the state (three-year average payout: 115%) to keep NITF’s capitalisation in check.

We also expect the claims ratio of the Agrahara insurance scheme, which provides medical insurance for public-sector employees and their families and accounted for 29% of NITF’s gross premiums in 1H20, to increase after the government’s decision to expand coverage and benefits, if the additional risks are not adequately priced. However, we expect NITF’s low operating costs and modest claims from the insurer’s strike, riot, civil commotion and terrorism (SRCCT) programme to reinforce profitability.

Fitch believes constant delays in the renewal of NITF’s reinsurance arrangements will weaken the insurer’s risk-mitigation practices and credit profile. Fitch noted some delays in the government’s approval for the renewal of NITF’s reinsurance cover in 2020 and in the past. The insurer purchased reinsurance for its SRCCT programme and inward reinsurance covers in 2H20.

NITF’s portfolio is entirely invested in government securities and its sovereign investment-to-capital ratio was 148% at end-1H20 (2019: 215%).

NITF’s ‘Favourable’ business profile assessment reflects its substantive business franchise, which is supported by its full state ownership and role in implementing government policies. NITF is the only domestic reinsurer and a state mandate requires all domestic non-life operators to cede 30% of their reinsurance to NITF.

RATING SENSITIVITIES

SLIC

Factors that could, individually or collectively, lead to negative rating action/downgrade:

– Significant weakening in SLIC’s business profile, for instance due to a weaker franchise, operating scale or business risk profile.

– Deterioration in the RBC ratio to below 350% for the life and 200% for the non-life businesses for a sustained period or a significant increase in non-core investments.

– Deterioration in the non-life combined ratio to well above 100% for a sustained period.

Factors that could, individually or collectively, lead to positive rating action:

– Significant reduction in SLIC’s investment and asset risks on a sustained basis while maintaining its ‘Favourable’ business profile and capitalisation at current levels.
NITF

Factors that could, individually or collectively, lead to negative rating action/downgrade:

– Deterioration in the RBC ratio to below 250% for a sustained period.

– Deterioration in risk-management practices, for instance, due to persistent delays
in renewing reinsurance arrangements.

– Deterioration in the combined ratio to above 103% for a sustained period.

– Significant weakening in NITF’s business profile, such as a large reduction in government-related business.

Factors that could, individually or collectively, lead to positive rating action/upgrade:

– Improvements to its risk-management practices, including the timely purchase of adequate reinsurance covers while our assessment of the insurer’s capitalisation and business profile remains unchanged.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

Sri Lanka budget ignores provincial polls while stripping council powers: MP

ECONOMYNEXT – A Sri Lankan opposition legislator has criticized the government’s 2027 budget speech for failing to mention or allocate provisions for long-delayed Provincial Council elections, while accusing the administration of stripping away devolved powers.

“Previous governments had a policy on their policy statement: they would mention the Provincial Council elections,” Illankai Tamil Arasu Kachchi (ITAK) MP Shanakiyan Rasamanickam told parliament during the budget debate.

“Not a single word about the Provincial Council election! About the Provincial elections, you haven’t mentioned a word, but what have you mentioned? You are taking away the powers of the Provincial Council.”

Rasamanickam pointed out that the government was taking over six provincial hospitals — Mullaitivu, Mannar, Kilinochchi, Vavuniya, Avissawella, and Gampaha — while continuing to delay the polls.

The 2027 national budget presented by President Anura Kumara Dissanayake proposed to transfer to
the central Government the District General Hospitals of Mannar, Mullaitivu, Vavuniya, Kilinochchi, Gampaha and Avissawella, which are administered by the Provincial Councils, out of the 20 District General Hospitals.

“You are taking away power that was given to the Provincial Council, whilst not having Provincial Council elections,” he said.

“Last year, powers given to the provinces regarding environmental policies — you’ve taken it back, with no consent of the Provincial Council.”

He also criticized the budget speech for making no mention of land release issues in the North and East, a new constitution, or the government’s pledge to abolish the executive presidency.

“In this budget, I must also mention, not only the Provincial Council election, about the new constitution — not a single word about the constitution! What is happening to your plans and proposals of abolishing the executive presidency? Where is the new constitution?” Rasamanickam questioned.

The legislator further raised concerns over proposed legislation, including the Protection of the State from Terrorism Act (PSTA) and the Organized Crime Bill, arguing they were more repressive than the existing Prevention of Terrorism Act (PTA) they are meant to replace.

“The trajectory of this government is worrying to me. It’s really worrying to me,” Rasamanickam said.
“Because if the objective is to say that there is no Tamil national question, if the objective is to say that you all have resolved any ethnic issue that this country faced, then I think the Tamil people will teach this government a very, very, very harsh lesson in the future.” (Colombo/Nov13/2026)

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Sri Lanka stocks close down 0.60-pct, dragged by HNB and LOLC

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange closed down on Friday, CSE data showed, with the benchmark All Share Price Index moving down 0.60 percent.

The ASPI was down 133.22 points at 22,024.18, while the more liquid S&P SL20 was down 1.06 percent, or 67.55 points, at 6,298.02.

The ASPI ended the week up 784.53 points from last Friday.

Positive contributors to the ASPI were Dialog Axiata (up 0.40 percent at 50.20 rupees), Distilleries Company of Sri Lanka (up 0.52 percent at 58.30 rupees), Aitken Spence (up 3.60 percent at 151.00 rupees), Ceylon Tobacco Company (up 1.05 percent at 1,828.50 rupees), and LOLC Finance (up 1.96 percent at 5.20 rupees).

Hatton National Bank (down 1.88 percent at 403.75 rupees), Richard Pieris and Company (down 6.21 percent at 27.20 rupees), LOLC Holdings (down 2.17 percent at 405.00 rupees), Sampath Bank (down 1.91 percent at 154.00 rupees), and Singer (Sri Lanka) (down 2.40 percent at 77.30 rupees) were top negative contributors.

Market turnover was 3.23 billion rupees. Capital goods led turnover with 869.21 million rupees. (Colombo/Nov13/2026)

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Sri Lanka MP slams budget speech for omitting Tamil national question

ECONOMYNEXT – A Sri Lanka legislator has voiced strong disappointment that the President’s budget speech failed to make a single mention of the Tamil national question.

“It is very unfortunate that in His Excellency the President’s speech, there has not been a single word mentioned about the Tamil national question. Not a single word,” Shanakiyan Rasamanickam said.

“A budget speech generally, is a policy direction of the government for the next year. The budget speech is not only a statement of the country’s fiscal position or the economy’s position. It is the country’s, the government’s, plan, or what the government plans to do the following year. That’s a policy statement.”

Former presidents would at least mention the Tamil question even if it was not resolved, he said.

Former President Ranil Wickremesinghe in his speech, in his policy statement, he would mention: “The Tamil national question must be resolved,” Rasamanickam said.

Former Presidents Maithripala Sirisena and Gotabaya Rajapaksa also mentioned that the national ethnic question must be resolved, he added.

“Every President, every country’s Head of State, in their policy statements, have acknowledged the fact that there is an unresolved national issue, the Tamil national question, that it needs to be resolved. Various governments have proposed various mechanisms; none of them have succeeded, but at least it was mentioned.”

This year’s budget made allocations for the Office of Missing Persons, and the Office of Reparations.

“But the domestic mechanism is a mechanism that the victim community has rejected. So you all are allocating money to a mechanism where the victim community is not going to be part of.”

Last year’s budget 1 billion was allocated to be spent on the Trincomalee and Jaffna airports.

“Where was that 1 billion for the Trincomalee and Jaffna airports spent last year?”

“The trajectory of this government, Honourable Deputy Speaker, is worrying to me. It’s really worrying to me. Because if the objective is to say that there is no Tamil national question, if the objective is to say that you all have resolved any ethnic issue that this country faced, then Honourable Deputy Speaker, then I think the Tamil people will teach this government a very, very, very harsh lesson in the future.” (Colombo/Nov13/2026)

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Sri Lanka sells extra Rs6.5bn Treasury bills after auction

ECONOMYNEXT – Sri Lanka has sold 6,500 million rupees of treasury bills offered on tap at an average rate of 9.95 percent, the public debt management office said, bringing the total of bills sold in the week to 85.562 billion rupees.

The issue offered 90 billion.

Total market subscription was 6.5 billion rupees.

The debt office sold a 12-month bill at 9.95 percent.

On Wednesday (11) the debt office raised 79 billion rupees of 3, 6 and 12 month bills after offering 90 billion.

Read more
Sri Lanka Treasury bill yields hold broadly steady, less bills sold

The settlement date is November 13. (Colombo/Nov13/2026)

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Access Engineering Sept quarter group net profit surges 200-pct to Rs4.75bn

ECONOMYNEXT — Sri Lanka’s Access Engineering PLC recorded a group net profit attributable to equity holders of Rs. 4.75 billion for the quarter ended September 30, surging 200 percent from Rs. 1.58 billion a year earlier, interim accounts showed.

Basic earnings per share rose to Rs. 4.08 for the September quarter, up from Rs. 1.58 previously.

Quarterly group revenue expanded 36 percent to Rs. 20.39 billion from Rs. 14.94 billion, underpinned by condominium property handovers — reflected in inventories dropping Rs. 7.69 billion since March to Rs. 35.71 billion — alongside strong automobile sales and steady civil engineering execution.

Cost of sales rose at a slower 27 percent to Rs. 14.34 billion, lifting gross profit by 64 percent to Rs. 6.05 billion and expanding gross margins to 29.7 percent from 24.7 percent.

Other income jumped 144 percent to Rs. 259.9 million, while administrative expenses rose 75 percent to Rs. 1.14 billion, leaving operating profit up 64 percent at Rs. 5.16 billion.

However, finance costs more than doubled, rising 107 percent to Rs. 1.18 billion on elevated group borrowings of Rs. 43.74 billion, partly offset by finance income climbing 302 percent to Rs. 42.2 million.

Share of results from equity-accounted investees rose 122 percent to Rs. 26.7 million, pushing pre-tax profit up 56 percent to Rs. 4.05 billion.

Income tax swung to a net reversal of Rs. 186.6 million from an expense of Rs. 804.1 million, boosted by deferred tax assets on unrelieved losses from a 100 percent enhanced capital allowance claimed by 60 percent-owned radiopharmaceutical subsidiary Access Medical Tracers (Private) Limited.

Total period profit rose 136 percent to Rs. 4.24 billion, with non-controlling interest declining 24 percent to Rs. 164.9 million following last year’s buyout of minority shareholders in Harbour Village (Private) Limited.

No separate exchange gain or loss was itemized in quarterly earnings, though foreign currency translation via associates recorded a Rs. 17.4 million loss in other comprehensive income, alongside USD 16.6 million in corporate guarantees.

Notes also flagged an expected Rs. 1.45 billion recovery from the terminated South Asia Commercial and Logistics Hub project, a Rs. 225 million post-quarter legal settlement already provided for, and a Supreme Court appeal over a 2011/12 PAYE tax ruling.

Group assets stood at Rs. 132.4 billion as of September 30, with net asset value per share at Rs. 46.70, as the Employees’ Provident Fund raised its stake to 5.69 percent.

Access Engineering shares closed at 80.00 rupees at the end of September and are currently trading around 85.80 rupees. (Colombo/Nov13/2026)

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Sri Lanka private sector says timely implementation of Budget 2027 key

ECONOMYNEXT – Private sector body, The Ceylon Chamber of Commerce, said it was encouraged by the broad direction of Budget 2027, noting that it reinforces Sri Lanka’s commitment to economic transformation while maintaining policy continuity, macroeconomic stability, and fiscal discipline.

“This continuity is particularly important as the country seeks to transition from economic stabilisation to a more durable, investment-led growth trajectory.”

The chamber also noted several areas where the Budget could have placed greater emphasis to strengthen the country’s growth prospects.

“In particular, there is a need for a stronger focus on attracting Foreign Direct Investment (FDI), accelerating factor market reforms, particularly in land and labour, and fast-tracking public procurement reforms to improve the efficiency and speed of project implementation.

“More targeted and actionable proposals could have been introduced to unlock the potential of sectors with significant growth opportunities, including tourism, agriculture, IT/BPO and logistics.”

The chamber said the budget contains positive measures aimed at enhancing competitiveness, and external sector resilience, while presenting opportunities for focus on sectors that can accelerate growth.

“A number of the key structural reforms identified in last year’s Budget have been carried forward and strengthened, providing greater certainty and predictability to businesses and investors.

“These include the continued implementation of the Trade National Single Window (TNSW), the phased removal of para-tariffs, the rollout of the Digital ID framework, efforts to expand market access through new Free Trade Agreements (FTAs), the strengthening of one-stop-shop investment facilitation mechanisms, progress on Customs reforms, the expansion of Bandaranaike International Airport (BIA), enhanced financing support for SMEs, and reforms relating to the management of State-Owned Enterprises.”

The CCC said that more than 20 proposals submitted by it have been reflected in Budget 2027.

These include measures to strengthen investor facilitation through the establishment of a professionally managed investment promotion agency; continued efforts to improve trade facilitation and export competitiveness; the Government’s consideration of a successor programme with the International Monetary Fund (IMF); accelerated progress on key legislative reforms; the expansion of digital government services; and the promotion of cashless payments and broader digital adoption. The Budget has also captured several priorities relating to energy security, including the accelerated deployment of Battery Energy Storage Systems (BESS) and investments in fuel storage infrastructure, initiatives to optimize underutilized agricultural land, measures to support the expansion of the digital economy and the IT/BPO sector, and tax reforms to support exporters, including the acceptance of newly VAT-registered exporters as eligible exporters.

“The inclusion of these priorities reflects the value of sustained public-private dialogue and demonstrates increasing alignment between national policy objectives and the needs of a competitive, export-oriented economy.

“The priority now must be effective and timely implementation to translate policy commitments into investment, competitiveness, exports and sustainable growth.” (Colombo/Nov13/2026)

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