Co-operative Insurance boosts governance, eyes profit

It also appointed a new CEO early this year to boost efforts.

Sri Lanka-based Co-operative Insurance has shown a moderate company profile and volatile underwriting performance, offset by a satisfactory regulatory capital position. The insurer's corporate governance remains a concern, according to Fitch Ratings.

“We expect underwriting profit to rise gradually with better governance practices, enhanced claims management, and a rebound in business activities following the lifting of regulatory restrictions,” the ratings agency said.

CICPLC faced corporate governance lapses in 2023, including non-compliance with Colombo Stock Exchange (CSE) rules, which led to a temporary restriction on its operations and a trading halt. 

Since then, the company has taken steps to improve governance by enhancing transparency and strengthening internal controls. Leadership changes in early 2024, including the appointment of a new CEO, further supported these efforts.

In terms of financial performance, CICPLC reported a net loss of US$86,000 (LKR258m) in 2023 due to rising incurred claims (up 38%) and a drop in gross written premiums (down 11%). 

This resulted in a combined ratio of 132%. However, profitability improved in the first half of 2024, with the combined ratio reducing to 118% and gross written premiums increasing by 7%.

CICPLC's regulatory risk-based capital (RBC) ratio stood at 312% at the end of H1 2024, down slightly from 333% in 2023 but still satisfactory. 

Its life insurance subsidiary, Cooplife Insurance Limited, also maintained an adequate RBC ratio at 228%.

Fitch noted that investment and liquidity risks have eased due to Sri Lanka's improved sovereign ratings in September 2023. CICPLC's investment portfolio is largely composed of government securities (19%), corporate bonds (27%), and term deposits (35%) with domestic financial institutions.

(US$1.00 = LKR299.80)