Lankapage Logo CP 22 YEARS
Go Home Home Serving the Sri Lankan community globally since 2000
go to

Leading News from Sri Lanka::

* Fitch says losses from Sri Lanka’s riots manageable for insurers
Fri, May 27, 2022, 10:42 pm SL Time, ColomboPage News Desk, Sri Lanka.

May 27, Colombo: Fitch Ratings says Sri Lanka’s state-owned National Insurance Trust Fund Board’s (NITF, A+(lka)/Rating Watch Negative) Strike, Riot, Civil Commotion and Terrorism (SRCCT) fund will bear the brunt of losses stemming from recent riots in the country, with primary insurers experiencing little impact.

“We believe gross losses from the riots are likely to exceed LKR1 billion. However, NITF’s net loss will be limited to this amount due to the protection provided by its excess of loss reinsurance cover. We expect NITF to have sufficient liquid assets to meet its claim obligations,” the global rating agency said.

Widespread riots broke out in Sri Lanka following an attack on anti-government protests in Colombo on 9 May. Rioters set vehicles on fire and destroyed property; including houses belonging to politicians, according to reports. It is too early to estimate losses from the event, although NITF has started to receive claims from primary insurers, Fitch said.

The SRCCT fund, which is managed by NITF, provides cover against losses to property due to strikes, riots, civil commotion and terrorism. Primary insurers provide such cover as an add-on to their non-life products. Technical advisory and working committees, comprising industry participants, oversee the management of the SRCCT fund. Regulation requires NITF to administer the SRCCT fund separately from its other business lines.

Primary insurers have net retention of LKR2.5 million per policy for motor claims under the SRCCT cover, subject to an aggregate amount of LKR10.0 million, with additional losses passed on to NITF. Non-motor claims are fully passed on to NITF, subject to any excess borne by the policyholder. Once total losses exceed LKR1 billion, NITF is able to recover additional losses under its excess of loss reinsurance cover up to a maximum of LKR10 billion. NITF’s reinsurance cover for SRCCT, which is placed with international reinsurers, is effective from February 2022 to July 2023.

According to Fitch Ratings, NITF’s net assets exceeded LKR14 billion at end-2020, while the SRCCT line recorded a net profit of LKR5 billion for the year. The fund’s assets were predominantly invested in local-currency denominated securities issued by the government of Sri Lanka. We affirmed Sri Lanka’s Long-Term Local-Currency Issuer Default Rating at ‘CCC’ on 19 May, as the government has continued to service local-currency debt and we assume this will continue, despite defaulting on its foreign-currency debt obligations.

“We believe the SRCCT fund could see elevated losses in the near-term as a result of the ongoing civil unrest amid Sri Lanka’s weak economic conditions. Cover provided by the SRCCT fund saw an increased uptake following the Easter Sunday terrorist attacks in 2019, with annual premiums rising to LKR6.1 billion in 2020, from LKR4.6 billion in 2018. SRCCT is NITF’s most profitable business line, with a loss ratio of less than 2% in the past five years, except in 2019, when the loss ratio reached 12%,” the agency said.

“We do not expect claims from the recent riots to affect NITF’s capital position. However, weakness in its non-SRCCT business lines could affect the rating, as reflected in the Rating Watch Negative. We recently placed the National Ratings of all rated Sri Lankan insurers, including NITF, on Rating Watch Negative, due to elevated investment and liquidity risks, pressure on regulatory capital positions and a likely worsening in financial performance.”


ColomboPage - Recent 10 Stories ::
Donation of 5000 MT rice from China arrives in Sri Lanka
-- [14 minutes ago]
Flash Digital Account teams up with online pharmacy Flash Health for convenient payment
-- [1 hour and 20 minutes ago]
HNB ‘Oba Venuwen Api’ initiative donates vital medicines to hospitals
-- [7 hours ago]
Hayleys Fabric natural mahogany dye listed on Top 10 innovations for ISPO Textrends 2024
-- [7 hours ago]
CID probes illegal water release from Randenigala, Rantambe reservoirs
-- [7 hours ago]
Sri Lanka to receive four fuel ships from India next month
-- [8 hours ago]
International operations at Jaffna International Airport to resume from July 1
-- [9 hours ago]
Sri Lanka Attorney General requests court to dismiss case against Russian Aeroflot flight
Registrar General’s Department, post offices curtail services due to fuel crisis
Lanka IOC restricts sale of petrol

Copyright © 2000, 2020 by (LLC) :
The news and other contents on ColomboPage are copyrighted property of, LLC. Any unauthorized use of any information on ColomboPage may constitute a violation of copyright laws. You need written permission to reproduce, republish, post, transmit, broadcast or distribute, material from this site from, LLC. However, news organizations or broadcasters in Sri Lanka may republish the news items in ColomboPage with proper acknowledgment to ColomboPage.