Sri Lankan insurers will most likely see fewer risks in investment and liquidity post-debt restructuring plans of the Sri Lankan government, Fitch Ratings observed.<\/p>\n\n\n\n
This plan is expected to have no direct impact on the local-currency government debt holdings of insurers, banks, and non-banking financial institutions, easing pressure on their investment and capital profiles, the rating agency said.<\/p>\n\n\n\n
Sri Lankan insurers’ investment and liquidity risk profiles are closely linked to the sovereign, banks, and non-bank financial institutions. <\/p>\n\n\n\n
Their investment portfolios are predominantly composed of fixed-income securities issued or guaranteed by the government, corporate debt, and deposits with local banks and non-banking financial institutions.<\/p>\n\n\n\n
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Foreign-currency liquidity in the local banking system remains limited, impacting insurers’ ability to meet foreign-currency obligations such as reinsurance payments and claim obligations from foreign currency-denominated policies. <\/p>\n\n\n\n
However, Fitch-rated insurers have foreign-currency deposits with local banks to support their foreign-currency obligations, and their foreign-currency insurance contract obligations are mostly reinsured.<\/p>\n\n\n\n
Additionally, Fitch maintains a Rating Watch Negative (RWN) on Sri Lankan insurers due to high investment and liquidity risks, pressure on regulatory capital positions, and a weak financial performance outlook. <\/p>\n\n\n\n
While the proposed debt restructuring may not directly affect local-currency government debt holdings, it will impact insurers’ holdings of foreign-currency-denominated Sri Lanka Development Bonds (SLDBs).<\/p>\n","protected":false},"excerpt":{"rendered":"
Sri Lankan insurers will most likely see fewer risks in investment and liquidity post-debt restructuring…<\/p>\n","protected":false},"author":1,"featured_media":3198,"comment_status":"open","ping_status":"open","sticky":true,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[4,5],"tags":[638,946,14],"class_list":["post-3197","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets","category-news","tag-debt-restructuring","tag-insurers","tag-sri-lanka"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t