Fitch Sri Lanka gives HNB Assurance A(lka) insurance rating

Dec 18, 2007 (LBO) – Fitch Ratings Sri Lanka has given HNB Assurance a national insurer financial strength rating of ‘A(lka)’ and a national long-term rating of ‘A-(lka)’ with stable outlooks. HNB Assurance is 60 percent-owned by Hatton National Bank Ltd (HNB), the second-largest private bank in Sri Lanka, rated ‘AA-‘. Fitch says HNB Assurance’s ratings incorporate limited implicit support from HNB.

HNB Assurance Ltd’s current market position is modest, as the sixth-largest non-life player in Sri Lanka with a 2.4 percent market share in 2006, and the seventh-largest life assurer, with 2.9 percent market share.

HNB Assurance plans to double its turnover in 2007-10.

“This is an ambitious target, even allowing for continued double-digit inflation,” Fitch observed.

“To achieve these targets, HNB Assurance Ltd will increase its branch network and the company will look to diversify its client base away from bank customers.”

HNB Assurance Ltd has been consistently profitable since its launch in 2001, with the non-life combined ratio only exceeding 100 percent in the exceptional year of 2004.

“This performance supports the ratings, although the agency notes that fresh