Fitch Ratings – Sydney: Fitch Ratings has affirmed Sri Lanka Insurance Corporation General Limited’s (SLIC General) ‘CCC+’ Insurer Financial Strength (IFS) Rating. Fitch has simultaneously withdrawn the IFS Rating.
The affirmation reflects SLIC General’s ‘Favourable’ company profile and adequate capital position offset by its high investment and asset risk, which is driven by exposure to sovereign-related investments. Fitch typically does not assign Outlooks to issuers with a rating of ‘CCC+’ or below.
Fitch has withdrawn the IFS Rating for commercial reasons. SLIC General’s ‘A+(lka)’/Stable National IFS Rating is not part of this review and is unaffected by the withdrawal of the IFS Rating.
Key Rating Drivers
‘Favourable’ Company Profile: Fitch regards SLIC General’s company profile as ‘Favourable’, reflecting a ‘Favourable’ business profile and ‘Neutral’ corporate governance relative to other Sri Lankan insurers. The business profile is supported by a substantive franchise, large domestic operations and a wide distribution network. SLIC General was the largest primary non-life insurer in Sri Lanka in 2025 by gross written premiums (GWP).
High Exposure to Sovereign Assets: Sri Lanka’s weak sovereign credit quality (Long-Term Issuer Default Rating: CCC+) continues to exacerbate the investment and liquidity risk of domestic insurers, despite the sovereign upgrade in December 2024. SLIC General’s Fitch-calculated risky-asset ratio remained high despite falling to 296% by end-2025 (2024: 371%). Fitch scores its investment and asset risks at ‘ccc+’ on the international scale, reflecting high exposure to sovereign and sovereign-related assets. As a result, its final IFS Rating is below its implied IFS Rating of ‘b’.
Satisfactory Regulatory Capital Position: The regulatory capital adequacy ratio reduced slightly to 269% by end-2025 (end-2024: 277%), but remains well above the 120% regulatory minimum and compares well against that of other non-life insurers in Sri Lanka. We estimate SLIC General’s Fitch Prism Global score remained ‘Weak’ in 2025, similar to the 2024 result, reflecting high investment risk.
Cyclone Losses Affect Underwriting: The combined ratio rose to 105% in 2025 (2024: 100%), reflecting a higher net loss ratio, after reinsurance protection, following claims arising from Cyclone Ditwah. Net profit remained broadly stable at LKR2.5 billion in 2025 (2024: LKR2.7 billion), supported by investment income that offset the weaker underwriting result. GWP grew 20% in 2025, driven by 30% growth in motor insurance following the relaxation of vehicle import restrictions in 2025. The GWP mix remained concentrated in motor, although management aims to increase the contribution from non-motor lines, such as fire and engineering, to diversify earnings.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
No longer applicable as the IFS Rating has been withdrawn
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
No longer applicable as the IFS Rating has been withdrawn