Sri Lanka Insurance Corporation Life maintains stable outlook, strong investment

Its investment porftolio has minimal exposure to foreign currency assets.

Sri Lanka Insurance Corporation Life (SLIC Life) will have a stable outlook, driven by exposure to sovereign-related investments, according to Fitch Ratings.

SLIC Life’s company profile is considered favourable due to its long operating history, strong business franchise, and extensive distribution network. 

Fitch expects investment and liquidity risks for SLIC Life to remain manageable despite high exposure to sovereign-related investments.

SLIC Life’s investment portfolio mainly consists of government securities, corporate debt, equity securities, and term deposits, with minimal exposure to foreign currency assets at about 1% of total investments.  SLIC Life’s regulatory capital position is considered 

satisfactory, with a Risk-Based Capital (RBC) ratio of 646% at the end of the first half of 2024, up from 425% in 2023. 

This significantly exceeds the regulatory minimum of 120%, driven by a reduction in concentration and market risk charges. However, Fitch notes that the Fitch Prism Global score remains 'Somewhat Weak' due to high investment risks.  

Premium growth showed signs of recovery in the first half of 2024, with gross written premiums rising by 18%, driven by a 34% increase in new business premiums and a 19% increase in renewal premiums. 

This marks a rebound from sluggish growth in the preceding years, when premiums fell by 5% in 2022 and rose by just 1% in 2023. 

The company’s life segment reported an average return on equity (ROE) of 18% from 2021 to 2023, supported by investment income, whilst pretax return on assets (ROA) averaged 2%.