Fitch Ratings has placed the National Insurer Financial Strength (IFS) Ratings of seven Sri Lankan insurers on Rating Watch Negative (RWN). The insurers are:
-National Insurance Trust Fund Board, HNB Assurance PLC, HNB General Insurance Limited, People’s Insurance PLC, Continental Insurance Lanka Limited
Co-operative Insurance Company Limited and Sanasa General Insurance Company Limited.
Fitch has also taken rating action on Sri Lanka Insurance Corporation. Fitch downgraded Sri Lanka Insurance Corp’s IFS to ‘CC’; placed IFS, ‘AA(lka)’ National IFS on RWN.
The RWN is driven by heightened near-term downside risks to the insurers’ credit
profiles, including elevated investment and liquidity risks, pressure on regulatory capital positions and a weaker financial performance outlook. The RWN also reflects potential pressure on foreign-currency obligations for some companies due to the stretched foreign- currency liquidity in the local banking system.
Fitch believes recent negative rating action on the Sri Lanka sovereign and on various financial institutions underscores the investment risks of domestic insurers, whose investment portfolios 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 downgraded Sri Lanka’s sovereign rating to ‘C’, from ‘CC’ and had placed the ratings of several financial institutions on RWN.
Fitch believes the heightened investment risks and earnings pressure could affect insurers’ regulatory capital profiles. A significant deterioration in the credit profiles of financial institutions could lead to lower regulatory risk-based capital (RBC) ratios, as investments will be subject to incremental risk charges according to local regulatory RBC rules.
We think the weak foreign-currency liquidity in the local banking system could limit insurers’ ability to meet foreign-currency obligations. This includes premium payments to foreign reinsurers and other costs that are typically sourced from overseas. Foreign-currency denominated insurance contract obligations vary by insurer, but tend to be small and limited to certain non-motor classes.
Fitch-rated insurers do not have any local- or foreign-currency denominated debt in their capital structures. Fitch expects the weak operating environment to affect insurers’ earnings. Growth in motor insurance – the largest contributor to non-life premiums for most insurers – is likely to remain subdued, as Fitch expects the government’s ban on auto imports, imposed in 2020 to control currency depreciation, to continue. In addition, underwriting profits will be squeezed by rising motor spare-part costs due to currency devaluation, while overall costs will climb with rising inflation. Insurers also have limited ability to reprice policies, given the dent in customers’ disposable incomes.
Sri Lankan non-life insurers rely on international reinsurers to mitigate risks in their non-motor businesses. Fitch thinks any material changes to reinsurance structures upon renewal amid rising reinsurance costs could undermine insurers’ risk management practices and ability write new business.
CSE Director Board appoints new chairman
The Chairman of the Colombo Stock Exchange (CSE) Dumith Fernando who has served in this role since July 01, 2020, has informed the Board of his intention to retire by rotation on June 23, 2022 at the conclusion of his current term as a Director. Subsequently, at its regular monthly board meeting held on May 19th, 2022, the Board of the CSE has elected Director Dilshan Wirasekara to succeed Fernando as Chairman with effect from June 24th, 2022. Wirasekara is currently Director and Chief Executive Officer of First Capital Holdings PLC.According to the Articles of Association of the CSE, it’s Chair is chosen from among the five Directors elected by the members of the CSE. The appointment of Wirasekara is in line with the CSE’s normal board succession practice.
The outgoing Chairman Fernando said that “We are very pleased with the advancement of the CSE in the last 2 years. The market has set records across capital raising, trading volumes and participation alongside significant wealth creation for investors. The CSE is also financially stronger than it has ever been, and I am pleased to hand over my role following the institution’s highest-ever profitability and capital reserves position. Credit for this is due to my fellow board members, management and staff as well as all those stakeholders who collaborated with us including our regulator the Securities & Exchange Commission of Sri Lanka and the stock broking and investor communities.”
Commenting on the appointment of his successor, he further stated “I have had the pleasure of serving as a Director with Dilshan for five years where he has been a critical and energetic member of the board. The board and I have full confidence that he will continue to work with all stakeholders to build on our recent efforts to transform into a modern-day multi-product exchange. I look forward to supporting Dilshan over the next few weeks to ensure a smooth transition.”Wirasekara thanked both the outgoing chairman for his leadership of the CSE over the last 2 years and the CSE Board for the confidence placed in him. He further stated, “I hope to continue the good progress at the CSE and look forward to working with the Board and the CSE team together with the regulator and the industry to advance our ambitious capital market development plans.”
SLIM Research Bureau embarks on a mission to promote fair trade in Sri Lanka
As corporates and consumers globally are shifting towards best practices such as sustainability, inclusivity, and most importantly, equality to all, “fairness” has become a significant part of how business and buyer decisions are made.With this in mind, SLIM Research Bureau, the research arm associated with the Sri Lanka Institute of Marketing (SLIM), recently signed an agreement with Fairtrade NAPP at SLIM Home, in aspiration of promoting fair trade and consumption of fairly traded products in the local market of Sri Lanka.Through this collaboration, SLIM Research Bureau and Fairtrade intends to launch a project – named “SRI-PROM” funded by AICS, the Italian Agency for Development Co-operation, and supported by Fairtrade Italy – that aims to contribute to the social and economic strengthening of rural areas in Sri Lanka, through the development of much more profitable eco-sustainable supply chains for small farmers.
Commenting on the partnership, SLIM President Mr. Nuwan Gamage stated: “SLIM is thrilled to enter into this milestone partnership with Fairtrade NAPP to instil globally accepted best practices within the corporate circle that help achieve fair, equitable trade relationships. The project will be the first step in inviting businesses across industries to become a trailblazer that sets an example both in Sri Lanka and around the world. We look forward to expand these efforts further in the days to come.”The modern concept of fair trade refers to the ethical and sustainable sourcing of products, where workers and farmers at the foundational level of supply and value chains are treated fairly. This, in turn, offers consumers a powerful opportunity to reduce poverty through their purchases.
Fairtrade International Programme Consultant for Sri Lanka, Standards Committee Chair, and Oversight Committee Asia-Pacific Representative Mrs. Iresha Sanjeewanie noted: “Fairtrade takes a 360-degree approach to address a number of different issues and developmental challenges faced by small-scale producers and workers. Though Fairtrade Standards are a glum eye-opener into the implications of unfair trade, in a broader sense, it advocates reform-oriented research and pushes to raise the bar in trade.”
Bank of Ceylon sponsors Annual Sand Paving Ceremony at Jaya Sri Maha Bodhi Temple Anuradhapura
Invoking the blessings of the sacred “Jaya Sri Maha Bodhi” situated in the historic city of Anuradhapura, on the country and on all its citizens, for peace, harmony and prosperity, the Bank of Ceylon conducted its annual ceremony of strewing fresh sand which is known as “weli Athirime Pinkama” in “Uda Maluwa” recently.
The ceremony took place with the participation of the Bank’s General Manager K.E.D. Sumanasiri, DGM Corporate and Offshore Banking Priyal Silva, DGM Human Resource Dhamma Wijeyawardhene, DGM Branch operations and Development Banking Nilantha Meneripitiyage, AGM North Central Province Mahinda Bandara, AGM Marketing Aruna Hettiarachchi, AGM North Western Mrs.Ruchindra Perera and other staff members. The event was organized by the Bank’s Assistant General Manager North Central Province (NCP) G.K.G. Mahinda Bandara and staff members of the NCP province with the guidance of the Atamasthanadipathi of Anuradhapura, the Most Venerable Dr. Pallegama Siriniwasa Thero.
PM blames ‘last administration’ for country’s current crisis
SJB, FSP agree on common agenda
SJB, SLFP decry members switching sides as nine ministers are sworn in
‘Dates have the highest sugar content to fight Coronavirus’
U.S. Congress to probe assets fleecing by US citizens of Sri Lankan origin
Sunday Island 27 December – Headlines
News5 days ago
BASL reiterates call for abolition of Executive Presidency
Features6 days ago
Whose saviour is Ranil? Sri Lanka’s or the President’s
Features5 days ago
Sri Lanka: Debt crisis, neocolonialism and geopolitical rivalry
News1 day ago
Canadian declaration of ‘Tamil genocide’ may influence European parliaments, EU – Maj. Gen. (retd.) Gallage
News6 days ago
Political horse trading in full swing alleges JVP
News4 days ago
Unprovoked attacks: AG asked to consider taking legal action against MR, others under ICCPR
News5 days ago
Canadian HC: SL sets gold standard for political humour
Features6 days ago
The River that Sajith Premadasa Did Not Cross