Tharika Prabashwari Kodikara
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LRA Assigns Initial Entity Rating to Sanasa Life Insurance Company PLC
|Long Term||BBB (ifs)|
Sanasa Life Insurance Company PLC (herein referred to as "SLC" or "the Company") operates with a large customer base as a provider of microinsurance to the Sanasa Societies as well as individual and corporate customers. SLC mainly focuses on providing insurance services to members of SANASA societies island-wide and individual and corporate of whom the majority are in the rural sector. SLC has a unique position especially amongst the lower and middle-income groups and the rural masses, being the Insurance company that provides, affordable and flexible insurance, catering to their special insurance requirements. The rating factors in SLC’s robust Gross Written Premium (GWP) growth of ~131% in CY22 to LKR~2,568mln from LKR~1,111mln in CY21, respectively, vis-à-vis the industry average growth of ~8.5% in the same period. SLC’s GWP mostly consists of society income. The Company has also reached out to new customer segments outside Sanasa. Consequently, the market share of the company increased to ~2% in CY22 from ~1% in CY21. Also, the Company has recorded net underwriting surpluses throughout the years supported by premium growth. The net underwriting surpluses increased from LKR~764mln in CY21 to LKR~1,100mln in CY22. The claims ratio of the Company, however, climbed to ~51% in CY22 as compared to ~24% in CY21. Increase in market share along with reducing claim ratio remains crucial. The investment book of the Company stood at LKR~1,695mln in CY22, vis-à-vis LKR~1,794mln in CY21; investment strategy reflects inclination the towards government securities, as investments in government securities have increased rapidly in CY22 with a share of ~33% of the total portfolio. Going forward, effective investment & liquidity management would be a key monitoring factor for the rating. SLC’s capital adequacy is deemed average; it was maintained above the minimum of ~120% and stood at ~257% in CY22. Sustenance of adequate capital amid increasing business volumes would remain critical.
The rating is dependent upon sustained improvement in the business and financial risk profile of the Company. The strong solvency profile of the Company, indicated through its ample reserves, places comfort in the rating. An improvement in investment performance and capital generation would be considered positive for the ratings and vice versa.
Sanasa Life Insurance Company PLC (“SLC” or “the Company”) is registered under the name of Seemasahitha Sanasa Rakshana Samagama as a public limited liability company in 2006, and was incorporated in Sri Lanka under companies act No 17 of 1982 and re-registered under the companies act No 07 of 2007 in 2008. SLC is authorised to carry out Life insurance business under the regulation of Insurance Industry Act. No 43 of 2000. SLC got listed on Colombo Stock Exchange in 2021. The principal activity of the Company is to undertake and carry on all life insurance solutions, offers a wide range of life products, tailored to meet the individual needs of customers. SLC owns three subsidiaries “Sanasa General Insurance company Limited (60%), Sanasa Media Networks (Pvt) Ltd (91%) and Sanasa Greenmart (Pvt) Ltd (64%) as well as an Associate named Sanasa Security Services (Pvt) Limited (49%).