Fitch Ratings has maintained Sri Lanka's People's Insurance PLC at its 'A(lka)' National Insurer Financial Strength rating, citing the company's moderate profile and adequate capital position despite recent underwriting challenges.
Fitch Ratings has affirmed People's Insurance PLC's 'A(lka)' National Insurer Financial Strength rating with a stable outlook, reflecting the insurer's solid capital reserves relative to other domestic non-life insurers, even as it contends with weaker underwriting results.
The company achieved significant premium growth during 2025, with gross written premiums expanding by 34%, substantially outpacing the industry average of 13%. Motor insurance premiums surged by 42%, driven by relaxed vehicle import restrictions, while non-motor premiums grew at 11%. However, motor insurance now accounts for 79% of the company's premium income, up from 75% the previous year, concentrating its revenue base in a single segment. Fitch expects this rapid growth to normalize as pent-up demand from import restrictions subsides.
The company's risk-based capital ratio declined to 246% by end-2025 from 389% in 2024, primarily due to concentration risk charges linked to deposits held with finance companies exceeding regulatory limits. Despite this reduction, the ratio remains supportive of the current rating and comparable to the industry average of 231%. The company maintained positive capital generation through retained earnings.
Underwriting performance remains a concern, with Fitch's calculated combined ratio reaching 112% in 2025 compared to 110% in 2024, reflecting claims from Cyclone Ditwah and broader market pressures. The three-year average combined ratio stands at 113%, while return on equity averaged 8%. Fitch anticipates gradual improvement as the company pursues selective expansion in lower-claim non-motor segments. The investment portfolio maintains a conservative profile with no equity exposure and heavy allocation to fixed-income instruments.
