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Fitch downgrades seven Sri Lankan Insurers’ National IFS Ratings;maintains Watch Negative

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Fitch Ratings downgraded the National Insurer Financial Strength (IFS) Ratings of seven Sri Lankan insurers following the recent sovereign downgrade and recalibration of the agency’s Sri Lankan National Rating scale. The seven insurers’ ratings have been maintained on Rating Watch Negative (RWN).

The recalibration is to reflect changes in the relative creditworthiness among Sri Lankan issuers following Fitch’s downgrade of Sri Lanka’s Long-Term Local Currency Issuer Default Rating (IDR) to ‘CC’ from ‘CCC’ on 1 December 2022. Fitch typically does not assign Outlooks or apply modifiers to sovereigns with a rating of ‘CCC+’ or below.

National rating scales are a risk ranking of issuers in a particular market designed to help local investors differentiate risk. Sri Lanka’s national rating scale is denoted by the unique identifier ‘(lka)’.

Fitch adds this identifier to reflect the unique nature of the Sri Lankan national scale. National rating scales are not comparable with Fitch’s international rating scales or with other countries’ national rating scales. For details, see Fitch Ratings Recalibrates Sri Lanka’s National Rating Scale, dated 19 December 2022.

The National IFS Ratings of the Sri Lankan insurers take into consideration their creditworthiness relative to other issuers in the country. The recalibration of the Sri Lankan National Rating scale has resulted in downgrades of the National IFS Ratings of the following insurers:Sri Lanka Insurance Corporation Limited to ‘A(lka)’/RWN from ‘AA(lka)’/RWN; National Insurance Trust Fund Board to ‘A-(lka)’/RWN from ‘A+(lka)’/RWN;

People’s Insurance PLC to ‘A-(lka)’/RWN from ‘A+(lka)’/RWN; HNB Assurance PLC to ‘A-(lka)’/RWN from ‘A+(lka)’/RWN; HNB General Insurance Limited to ‘A-(lka)’/RWN from ‘A+(lka)’/RWN; Continental Insurance Lanka Limited to ‘A-(lka)’/RWN from ‘A+(lka)’/RWN; and Construction Guarantee Fund to ‘BB(lka)’/RWN from ‘BBB-(lka)’/RWN.

KEY RATING DRIVERS

The downgrades of the National IFS Ratings of the seven insurers are driven by the downgrade of the sovereign’s Long-Term Local-Currency IDR and the recalibration of the national rating scale while also reflecting the relative creditworthiness among Sri Lankan issuers.

We believe that the investment and liquidity risks of insurers have increased due to the weaker credit profile of the sovereign and the subsequent rating action on various financial institutions; see Fitch Downgrades 10 Sri Lankan Banks’ Ratings, dated 12 January 2023.

The rated insurers’ investment portfolios, similar to that of other insurers in the country, are dominated by fixed-income securities issued or guaranteed by the government, deposits and securities issued by local banks, non-bank financial institutions and corporations. Fitch maintains the ratings of all domestic Sri Lankan banks on RWN amid the likelihood of capital and funding stress as the default risk on domestic debt increases while access to foreign-currency funding remains constrained.

We have maintained the insurers’ ratings on RWN to reflect the potential for these insurers’ creditworthiness relative to other entities on the Sri Lankan National Rating scale to further deteriorate amid high investment and liquidity risks, pressure on regulatory capital positions and a weaker financial performance outlook. The heightened investment risks and earnings pressure amid the weak operating environment could affect insurers’ regulatory capital profiles.



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10,000 children at 336 Child Development Centers nationwide to receive gift parcels from President today (13)

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Through an initiative taken by President Ranil Wickremesinghe, over 10,000 children under the care of 336 child development centers throughout the country, will receive gift parcels today (13).

The distribution sponsored by Ceylon Biscuits Limited is coordinated by the office of the President with support from the office of the Chief of Defence Staff and the Sri Lanka Army.

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Navy intercept multi-day fishing trawler carrying 200kg of narcotics

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It has been reported that the Sri Lanka Navy has intercepted a multi-day fishing trawler carrying around 200kg of narcotics suspected to be heroin and crystal methamphetamine (‘Ice’) off the southern coast of the island.

The boat and crew  were to be brought to the Galle Harbour,

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Advisory for Severe Lightning issued to Western, Southern, Sabaragamuwa, Northern and North-western provinces and in Monaragala district today (12)

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Advisory for Severe Lightning issued by the natural hazards early warning center at 01.30 p.m. to 11.30 p.m. on 12 April 2024

Thundershowers accompanied by severe lightning are likely to occur at several places in Western, Southern, Sabaragamuwa, Northern and North-western provinces and in Monaragala district.

There may be temporary localized strong winds during thundershowers.

General public is kindly requested to take adequate precautions to minimize damages caused by lightning activity.

ACTION REQUIRED:

The Department of Meteorology advises that people should:
• Seek shelter, preferably indoors and never under trees.

• Avoid open areas such as paddy fields, tea plantations and open water bodies during thunderstorms.

• Avoid using wired telephones and connected electric appliances during thunderstorms.

• Avoid using open vehicles, such as bicycles, tractors and boats etc.

• Beware of fallen trees and power lines.

• For emergency assistance contact the local disaster management authorities.
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