Sri Lanka Insurance Corporation Life (SLIC Life) is set to maintain a stable outlook, supported by its substantial exposure to sovereign-related investments, according to Fitch Ratings.
The company’s strong market position is underpinned by its long-standing operational history, solid business foundation, and extensive distribution network. Fitch anticipates that SLIC Life’s investment and liquidity risks will remain manageable, despite its significant holdings in sovereign-related investments.
SLIC Life’s investment portfolio is primarily composed of government securities, corporate debt, equity securities, and term deposits. The portfolio has minimal exposure to foreign currency assets, accounting for only about 1% of total investments. The company’s regulatory capital position is considered satisfactory, with its Risk-Based Capital (RBC) ratio rising to 646% at the close of the first half of 2024, up from 425% in 2023. This far exceeds the regulatory minimum of 120%, driven by a reduction in concentration and market risk charges.
However, Fitch has noted that SLIC Life’s Fitch Prism Global score remains “Somewhat Weak” due to its exposure to high investment risks. Despite this, premium growth showed positive signs of recovery in the first half of 2024, with gross written premiums increasing by 18%. This growth was fueled by a 34% rise in new business premiums and a 19% increase in renewal premiums, marking a significant rebound from the previous years when premiums fell by 5% in 2022 and grew only by 1% in 2023.
Between 2021 and 2023, the company’s life segment reported an average return on equity (ROE) of 18%, bolstered by investment income, while its pretax return on assets (ROA) averaged 2%.
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