Fitch downgrades seven Sri Lankan insurers’ national IFS ratings

Fitch Ratings has downgraded the National Insurer Financial Strength (IFS) Ratings of seven Sri Lankan insurers, following the recent sovereign downgrade and recalibration of the agency’s Sri Lankan National Rating scale.

The seven insurers’ ratings have been maintained on Rating Watch Negative (RWN).

Fitch said the recalibration is to reflect changes in the relative creditworthiness among Sri Lankan issuers following Fitch’s downgrade of Sri Lanka’s Long-Term Local Currency Issuer Default Rating (IDR) to ‘CC’, from ‘CCC’ on December 1, 2022.

Fitch typically does not assign Outlooks or apply modifiers to sovereigns with a rating of ‘CCC+’ or below.

National rating scales are a risk ranking of issuers in a particular market designed to help local investors differentiate risk. Sri Lanka’s national rating scale is denoted by the unique identifier ‘(lka)’.

Fitch adds this identifier to reflect the unique nature of the Sri Lankan national scale.

National rating scales are not comparable with Fitch’s international rating scales or with other countries’ national rating scales. For details, see Fitch Ratings Recalibrates Sri Lanka’s National Rating Scale, dated December 19, 2022.

The National IFS Ratings of the Sri Lankan insurers take into consideration their creditworthiness relative to other issuers in the country.

The recalibration of the Sri Lankan National Rating scale has resulted in downgrades of the National IFS Ratings of the following insurers:

• Sri Lanka Insurance Corporation Limited to ‘A(lka)’/RWN from ‘AA(lka)’/RWN;
• National Insurance Trust Fund Board to ‘A-(lka)’/RWN from ‘A+(lka)’/RWN;
• People’s Insurance PLC to ‘A-(lka)’/RWN from ‘A+(lka)’/RWN;
• HNB Assurance PLC to ‘A-(lka)’/RWN from ‘A+(lka)’/RWN;
• HNB General Insurance Limited to ‘A-(lka)’/RWN from ‘A+(lka)’/RWN;
• Continental Insurance Lanka Limited to ‘A-(lka)’/RWN from ‘A+(lka)’/RWN; and
• Construction Guarantee Fund to ‘BB(lka)’/RWN from ‘BBB-(lka)’/RWN.