Fitch Ratings has assigned Sri Lanka-based Co-operative Insurance Company Limited (CICL) a National Insurer Financial Strength (IFS) Rating and National Long-Term Rating of ‘BBB+(lka)’. The Outlook is Stable.
The rating reflects the non-life insurer’s modest domestic business profile, supported by its association with co-operative societies, good capitalisation and a somewhat conservative investment policy. CICL’s rating is also supported by its consistently strong financial performance and earnings.
We view CICL as a niche player in the domestic market with a modest non-life market share by gross written premium (GWP) of 3.2% at end-2017 (2016: 3.0%).
The insurer is 99.9% owned by 203 co-operative societies that together represent several multi-purpose co-operative organisations and rural banks. CICL’s rating also factors the insurer’s access to a sizable potential customer base within the co-operative movement and the access to potential customers from using the service centres owned by the co-operative societies. In 2017, almost one-third of the insurer’s policyholders were from the co-operative movement.
Fitch sees CICL’s capitalisation as good. The insurer’s capitalisation, as measured by its risk-based capital (RBC) ratio, was 183% at end-June 2018 (2017: 180%; 2016: 139%) against the 120% regulatory minimum. However, we expect capitalisation to remain constrained around this level over the medium term because of the insurer’s expansion plans, occasional appetite for high-risk investments as well as a possible infusion of capital to its life subsidiary, Cooplife Insurance Limited (Cooplife) should the need arise.