Fitch Affirms HNB Assurance, HNB General | Daily News


 

Fitch Affirms HNB Assurance, HNB General

Insurance at IFS ‘A(lka)’; Outlook revised to Stable

Fitch Ratings has revised the rating Outlooks of Sri Lanka-based life insurer HNB Assurance PLC (HNBA) and its fully owned non-life subsidiary, HNB General Insurance Limited (HNBGI), to stable from positive.

In addition, Fitch has affirmed the National Insurer Financial Strength (IFS) Ratings of HNBA and HNBGI at ‘A(lka)’.

The Outlook revision reflects the agency’s expectation of near-term volatility in earnings and capital due to the potential slowdown in business growth and financial market variability caused by the coronavirus pandemic.

The insurers’ ratings continue to mirror their ‘Favourable’ business profiles, good financial performance and capitalisation, as well as prudent investment policies. Fitch believes the fallout in economic activity due to the pandemic will hamper the industry’s new business growth.

“We expect new business generation for life insurance to be subdued over the near term due to the potential reduction in consumer spending and the industry’s dependency on agency networks that rely on human interaction for distribution.”

In addition, we expect non-life business growth to slow in light of the government’s temporary restriction on the import of motor vehicles to control currency depreciation. Fitch expects the insurers’ earnings to face near-term volatility from the slowdown in premiums and softer investment yields.

The pressure in earnings will be somewhat offset by lower claims from motor insurance lines due to fewer traffic accidents following restrictions on travel to contain the spread of the coronavirus. 


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