People's Insurance invests heavily in fixed-income

Its combined ratio also showed mid-year recovery.

Sri Lanka-based People's Insurance's regulatory risk-based capital (RBC) ratio increased to 406% in the first half of 2024 (H1 2024), up from 339% at the end of 2023 and 270% in 2022. This improvement was driven by higher retained earnings, as no cash dividends were declared for 2023, and a reduction in concentration risk charge, according to Fitch Ratings.

However, future cash dividends and ongoing pressure on underwriting profitability could affect the RBC ratio.

Underwriting profitability has been under strain due to a high expense ratio, caused by increased administrative costs linked to expanding the sales force. 

The introduction of the new Strike Riot Civil Commotion & Terrorism (SRCCT) guideline for motor insurance, which requires 100% cessation to the motor SRCCT segment, has further impacted profitability. 

The company's combined ratio rose to 117% in 2023, from 107% in 2022, but improved to 112% in H1 2024, whilst the claim ratio dropped to 69% in H1 2024, compared to 75% in 2023. The expense ratio, however, remained high at 42%.

The insurer's company profile is considered moderate, supported by the established "People's" brand but limited by a moderate operating scale and business diversification. 

Whilst the company is expanding into non-motor lines such as fire and marine insurance, motor insurance remains dominant, accounting for 75% of gross written premiums in 2023, down from 80% in 2021.

People's Insurance continues to prioritise domestic fixed-income securities, with over 97% of its invested assets in government securities, corporate bonds, and term deposits as of H1 2024.