Fitch Ratings has upgraded the National Insurer Financial Strength (IFS) Ratings of Sri Lanka-based life insurer, HNB Assurance PLC (HNBA), and its fully owned non-life subsidiary, HNB General Insurance Limited (HNBGI), to ‘A+(lka)’, from ‘A(lka)’. The Outlooks are Stable.
KEY RATING DRIVERS
The upgrade reflects the insurers’ improved capital position, as measured by strong regulatory risk-based capital (RBC) ratios. The ratings also take into account the insurers’ ‘Favorable’ business profiles and a sustained improvement in their non-life underwriting performance, while maintaining satisfactory earnings in its life insurance operation.
HNBA has comfortably maintained its life RBC ratio at above 300% since the implementation of the RBC rules by the regulator in 2016 (1Q21: 326%, 2020: 338%), which is well above the 120% regulatory minimum. Meanwhile, HNBGI has improved its non-life RBC ratio to above 200% in a sustained manner, to reach 253% in 1Q21 (2020: 255%, 2019: 226%), supported by a better non-life underwriting performance. We believe the improved non-life RBC ratio in 2020 was partly due to low motor and medical insurance claims induced by the pandemic-led lockdowns and, as such, we expect the ratio to normalize in the near-term as claims pick up.
The reduced claims saw HNBGI’s non-life combined ratio improve to 95% in 2020, from 101% in 2019, despite a slowdown in gross premium growth; however, we expect the ratio to normalize alongside capitalization in the near term. A potential depreciation of the rupee against the hard currencies may also increase claim costs, but we believe HNBGI’s prudent pricing and claim control efforts will support non-life underwriting profitability in the medium term. HNBA’s life profitability stayed solid, with a return on equity of 11% in 2020 (2019: 14%).
About HNB Assurance
As a subsidiary of Hatton National Bank PLC; an internationally acclaimed commercial bank in SriLanka, HNB Assurance PLC is a leading life insurance service provider in Sri Lanka, with a wide spectrum of solutions in its portfolio ranging from individual life policies to corporate life policies and Takaful services. Fitch Ratings Lanka ranked HNB Assurance PLC with a ‘National Insurer Financial Strength Rating’ of ‘A(lka)’, while HNB Assurance is also a publicly quoted company which was listed on the Colombo Stock Exchange (CSE) in the year of 2003. Click here to view our financial reports.
Our mantra for success has been a constant bespoke approach in delivering services and solutions. In order to become more accessible island-wide, HNB Assurance has established 61 branches across the country, as the network continues to grow. Over the years the company has developed strong relationships with world renowned reinsurance partners to ensure effective solutions for every stage of life. The staff led by a governance focused on excellence has been the key ingredient in the exponential growth of HNB Assurance.
We believe in being a trusted partner, one that understands the unique needs of people and ensures that they feel safe and secure as they journey through life. Through all stages, circumstances and challenges in life, we believe in being present as a pillar of strength for them and their loved ones, ensuring that they are well looked after.