HNB Assurance’s National Long-term rating upgraded

Fitch Ratings has upgraded HNB Assurance Plc’s (HNBA) National Long-term rating to ‘A(lka)’ from ‘A-(lka)’. Concurrently, Fitch has affirmed HNBA’s National Insurer Financial Strength (IFS) rating at ‘A(lka)’.

The Outlooks on both the National Long-term and the National IFS ratings are Stable.

The upgrade of HNBA’s National Long-term rating reflects mainly the implicit capital, franchise and distribution support from Hatton National Bank (HNB, National Long-term rating ‘AA-(lka)’). HNBA’s major shareholders are HNB (59.99 percent) and Alliance Finance Co Plc (9.97 percent), while the remaining 30.04 percent of the company’s shares are widely held.

With total assets of Rs. 2.8bn, HNBA was Sri Lanka’s sixth largest insurer at end-2008.

“Although parental support has always been a critical element of HNBA’s credit profile, Fitch believes the company’s strategic importance to the bank has grown since its incorporation in 2001,” said. Director in Fitch’s insurance team Stanley Tsai.

Fitch expects HNBA to further increase its distribution synergies with its parent through on-going product development, brand-building and cross-selling initiatives.

In addition, the ratings reflect HNBA’s adequate risk-based capital position, relative to the rating level and conservative investment strategy.

Fitch notes that HNBA’s credit profile has largely been resilient to the impact of the global economic downturn.