Fitch Ratings has affirmed Sri Lanka-based Co-operative Insurance Company Limited’s (CICL) National Insurer Financial Strength (IFS) Rating at ‘BBB+(lka)’. The Outlook is Stable.
The affirmation reflects CICL’s ‘Moderate’ business profile compared to other Fitch- rated insurers in Sri Lanka, as well as its satisfactory capital position and financial performance, which we believe will normalise after the recent improvement due to a slowdown in insurance claims in 2020.
The insurer’s regulatory risk-based capital (RBC) ratio improved notably to 252% in 1Q21 and 249% in 2020, from 187% in 2019 (2018: 178%) supported mainly by the low motor insurance claims following pandemic-led lockdowns.
Fitch expects the RBC ratio to normalise in the medium term as claims pick up. The capital position of CICL’s fully owned life subsidiary, Cooplife Insurance Limited, was satisfactory at end-2020, but we believe any significant capital infusion into the subsidiary may keep CICL’s capital buffers in check.
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