Fitch affirms Continental Insurance Lanka at ‘A-(lka)’/Stable
30 Jul 2015 - {{hitsCtrl.values.hits}}
Fitch Ratings Lanka has affirmed Sri Lanka-based Continental Insurance Lanka Limited’s (CILL) national insurer financial strength rating and national long-term rating of ‘A-(lka)’. The outlook is stable.
The ratings reflect CILL’s satisfactory capitalisation in terms of regulatory solvency, relatively short operating history and modest market share. The ratings also reflect the recent capital infusion by its parent, Distilleries Company of Sri Lanka PLC (DCSL; AAA(lka)/Stable). CILL is fully owned by DCSL through holding company Melsta Corp Limited.
CILL was established as a non-life insurer in 2010 and by 2014, even though the non-life industry is intensely competitive, it managed to account for a modest 3.2 percent of the segment’s gross written premiums. CILL’s combined ratio of around 104 percent for 2014 compares well with its peers’ and is satisfactory, especially given the company’s short operating history. Fitch expects improvements to the ratio to be slow given the tough competition in the industry.
CILL regulatory solvency ratio improved to 2.52x by end-December 2014 (end-December 2013: 1.77x), comfortably above the regulatory required level of 1x. The improvement follows DCSL’s injection of Rs.250 million of capital in July 2014. Fitch expects CILL’s regulatory solvency ratio to trend down as the business expands, but remain above 2x.
DCSL is a well-established, leading alcoholic beverage manufacturer in Sri Lanka. CILL benefits from group business and operational synergies.
