Fitch says HNB Assurance outlook stable

Fitch Ratings has assigned HNB Assurance Ltd a National Insurer Financial Strength (IFS) rating of 'A(lka)' and a National Long-term rating of 'A- (A minus)(lka)' with ‘Outlooks’ for both ratings being ‘Stable’.

HNB Assurance Ltd's current market position is modest, ranking as the sixth-largest non-life player in Sri Lanka with a 2.4% market share in 2006, and the seventh-largest life assurer, with 2.9% market share at the same date. HNB Assurance Ltd plans to double its turnover in 2007-10. This is an ambitious target, even allowing for continued double-digit inflation.

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, Fitch said.

Fitch said HNB Assurance Ltd's capitalisation as currently very strong, although declining as premiums written increase. Nevertheless, its level of capitalisation at September 2007 remains in excess of that which the agency deems adequate for its rating level. The HNB group has the capacity to increase the insurer's capital levels should it be required by future regulation, Fitch said.

HNB Assurance Ltd's investment strategy is viewed as suitably cautious with government stocks accounting for 85% of life investments and 72% of non-life investments. The company plans to increase its investments in corporate debt and equities, although this should not affect the present ratings.