Fitch Ratings has assigned People’s Insurance PLC a National Insurer Financial Strength (IFS) Rating and National Long-Term Rating of ‘A+(lka)’. The outlook is stable.
The ratings reflect the non-life insurer’s strong domestic business profile, which is supported by its association with the People’s Bank (Sri Lanka) (PB, AA+(lka)/Stable) group, strong capitalisation and adequate profitability metrics. The company has an operating history of eight years and is focused mainly on the motor segment - 84% of Gross Written Premiums (GWP) in 2017.
The company’s business profile is supported by the strong “People’s” brand name associated with its banking parent. Over 80% of People’s Insurance’s business was channelled from the group in 2017, mainly by way of referrals from its immediate parent, People’s Leasing & Finance PLC (PLF, B/AA-(lka)/Stable), a leading vehicle leasing financier in Sri Lanka. People’s Insurance operates predominantly via 124 window offices placed inside PLF and People’s Bank (PB) branches, which promote cross selling to PLF and PB clients. The group has helped the company achieve a medium non-life market share of 5.2%, as measured by GWP, in 2016.
Fitch Ratings believes the “People’s” brand will also help the company expand its non-group related business. People’s Insurance is a 75% subsidiary of PLF, which in turn is a 75% subsidiary of PB. PLF is one of Sri Lanka’s largest non-bank financial institutions, while PB is the country’s second-largest bank and is fully owned by the government of Sri Lanka (B+/Stable). People’s Insurance accounted for 4.6% and 0.5% of PLF’s and PB’s total assets, respectively, at end-September 2017.
Fitch sees People’s Insurance’s financial performance and earnings as strong. The company’s low-cost window-office distribution strategy means its expense ratio of 26% in 2017 (2016: 23%) is lower than that of the industry (9M17: 38%, 2016: 36%), leading to a combined ratio of 95% in 2017 and 94% in 2016, well below that of the industry (9M17: 103%, 2016: 105%).
0 comments: