Fitch Ratings has affirmed the National Insurer Financial Strength (IFS) ratings of Sri Lanka-based life insurer HNB Assurance PLC (HNBA) and its fully owned non-life subsidiary, HNB General Insurance Limited (HNBGI) at ‘A(lka)’.
The Outlook on the ratings is Positive. The rating and Outlook continue to reflect HNBA’s favourable business profile, improving financial performance and capitalisation of its non-life business, which is backed by an already strong life capital position, as well as its conservative investment policy.
The insurers’ business profile is buoyed by their substantive business franchise, which benefits from their association with the group’s parent, Hatton National Bank PLC (HNB, AA-(lka)/Stable), with whom they share the ‘HNB’ brand name. The insurers’ franchise is also strengthened by the synergies gained from using the wider branch network of HNB. Fitch’s business profile assessment also factors in the insurers’ diversified participation in business lines across the life and non-life insurance sectors, a risk appetite that is on a par with that of domestic peers and their moderate operating scale. HNBA is the sixth-largest among Sri Lanka’s 15 life insurers and HNBGI is the ninth-largest among 14 nonlife insurers.
Fitch expects the insurers’ capitalisation, as measured by their risked-based capital (RBC) adequacy ratios, to remain comfortably above the 120% regulatory minimum in the medium term. HNBA’s life RBC ratio was strong at 309% in 2019 (2018: 319%), while the non-life RBC ratio improved to 223% from 200% in 2018 as its non-life underwriting performance improved.
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