Sri Lanka Insurance Corporation (SLIC) has maintained its strong competitive position as the second-largest premium writer in both the life and general insurance segments while the company’s capitalization remained strong as at end-September 2009 with Rs.10.37 billion in shareholder funds.
According to a press release by RAM Ratings Lanka which upgraded SLIC’s claims paying ability rating to AAA from AA-, the company has lost some market share since relinquishing its monopoly status upon the industry’s liberalization in 1986.However, RAM stated that with the credibility associated with state ownership, the captive business derived from state institutions and SLIC’s aggressive expansion plans, the company will shore up its market share over the medium to long term. According to RAM Ratings, the outlook on the long-term rating has been revised from positive to stable.
SLIC’s investment portfolio amounted to Rs.59.09 billion as at end- December 2009, the largest in the domestic industry. While investments had traditionally been focused on government securities, the company has in recent times adopted a more aggressive stance with regard to equity. RAM stated that SLIC’s total exposure to equity securities increased to 32.17% as at end-December 2009 (end-December 2008: 29.23%). RAM further stated that the company’s investment portfolio is adequately managed.
RAM Ratings noted with concern that SLIC’s life underwriting performance has been weakened by a high incidence of maturity claims in its currently maturing life portfolio.
Total claims in the segment increased from Rs.2.50 billion during FYE 31 December 2007 to Rs. 3.29 billion during FY Dec 2008; it further increased by 5.88% on an annualized basis during the 9 months ending September 2009. Meanwhile, SLIC’s general segment is plagued with high claims in the miscellaneous segment owing primarily to the general accident and bankers’ indemnity policies. |
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