Sri Lanka Insurance Corporation ‘AAA’ rating confirmed: RAM

Aug 08, 2011 (LBO) - Sri Lanka Insurance Corporation's AAA claims paying rating has been confirmed by RAM Ratings with a stable outlook, based on its competitive position, state ownership and capitalization. RAM said SLIC accounted for 22.3 percent of industry premium by December 2010 and 40 percent of assets. It had system importance as the second largest premium underwriter.

RAM said SLIC's strategic direction was in line with the government's long term economic development plans particularly regarding investments.

"While this emphasises SLIC’s importance to the government, it also exposes SLIC to the risk of investing in businesses which are non-synergistic with SLIC’s business," RAM said.

During 2010 SLIC had acquired controlling stake in two entities operating in the energy industry (former Shell Gas units) for 7.04 billion rupees.

The company had a market share of 24.82 percent in the general segment during fiscal 2010 down from 26.1 percent in 2009 emerging as the largest player in the segment.

In the life-insurance segment, SLIC’s market share dipped to 19.29 percent from 20.19 percent in 2009, and was ranked as the third-largest life insuer.

"Looking ahead, SLI