Sri Lanka Insurance Corporation rating raised to AAA by RAM

May 11, 2010 (LBO) – RAM Ratings Lanka has upgraded Sri Lanka Insurance Corporation’s claims-paying ability rating, from AA- to AAA, with the outlook on the long-term rating revised from positive to stable, a statement said. Sri Lanka Insurance Corporation’s (SLIC’s) rating had been placed on a positive outlook in June 2009, after it came back under state ownership when a supreme court order overturned a previous privatisation of the state entity.

“The rating upgrade reflects the stronger degree of financial flexibility derived from such state support,” the rating agency said.

“The rating is also supported by the company’s competitive position and strong capitalisation.”

SLIC is the second-largest insurer in the island in terms of premiums underwritten and accounted for 23.45 percent of the industry’s composite premiums as at end-December 2009.

Given SLIC’s “systemic importance”, RAM Ratings Lanka said it believed that state support will be “readily” extended if needed.

“The company has maintained its strong competitive position as the second-largest premium writer in both the life and general segments,” RAM Ratings said.

“While it has lost some market share since relinquishing its mon