2013-09-19 17:05:01 -
A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of B++ (Good) and issuer credit rating of “bbb+” of Life Insurance Corporation (International) B.S.C. (c) (LICI) (Bahrain). The outlook for both ratings remains negative.
The ratings of LICI reflect its strong risk-adjusted capitalisation, sound track record of profit generation and niche market position. An offsetting factor is the lack of an integrated enterprise risk management (ERM) framework. The negative outlook reflects the ongoing pressures on the financial strength of LICI’s ultimate parent, Life Insurance Corporation of India (LIC), whose financial strength is intrinsically linked to the Indian state.
LICI enjoys a niche market position targeting the Indian expatriate community in the Gulf Cooperation Council (GCC) states, leveraging on
the group’s brand and portability of policies back to India. It enjoys an excellent market share of life insurance amongst the growing Indian community in the GCC.
LICI’s prospective risk-adjusted capitalisation is expected to remain strong. LICI’s consistent profitability and modest dividends have resulted in internal capital generation to support the future capital requirements of the company’s growing profile.
A.M. Best remains concerned over LICI’s lack of an integrated ERM capability as it continues to rely heavily on its parent. As LICI expands into new markets, it will need to develop a stronger internal ERM framework, as well as actuarial and product engineering capabilities.
Upward rating movement is unlikely at present. Downward rating pressure could arise if LICI’s risk-adjusted capitalisation were to decline to a level not supportive of its ratings or the financial strength of LIC were to deteriorate.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
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