Widespread riots broke out in Sri Lanka following an attack on anti-government protests in Colombo on 9 May
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, says Fitch Ratings.
The rating agency believes gross losses from the riots are likely to exceed LKR1 billion (US$3m). However, NITF’s net loss will be limited to this amount due to the protection provided by its excess of loss reinsurance cover. It expects NITF to have sufficient liquid assets to meet its claim obligations.
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. The SRCCT fund, which is managed by NITF, provides cover against losses to property due to strikes, riots, civil commotion and terrorism.
“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,” said Fitch.
“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.”
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