LONDON--( BUSINESS WIRE )--AM Best has downgraded the Financial Strength Rating to B (Fair) from B++ (Good) and the Long-Term Issuer Credit Rating to “bb” from “bbb” of Life Insurance Corporation (International) B.S.C. (c) (LICI) (Bahrain). Concurrently, AM Best has placed these Credit Ratings (ratings) under review with negative implications. LICI is a subsidiary of Life Insurance Corporation of India (LIC of India), an Indian state-owned insurance group and investment company. Life insurance corporation.
LICI’s consolidated risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), was significantly lower than previously anticipated at year-end 2018, following worse-than-expected results for that year driven by poor investment performance. The company is furthermore in breach of its regulatory solvency requirement in the United Arab Emirates.
The ratings reflect LICI’s balance sheet strength, which AM Best categorises as weak, as well as its adequate operating performance, neutral business profile and marginal enterprise risk management (ERM). The ratings benefit from rating enhancement from the Indian state, as AM Best expects that LICI could benefit from support from its ultimate shareholder, via LIC of India, to replenish its capital base.
The under review with negative implications status reflects the uncertainty surrounding the company’s plans to restore its solvency position, in particular regarding their sufficiency and timeliness in execution. AM Best is conducting detailed discussions with LICI’s management team regarding its capital and business plans and will assess the impact of any capital management actions on the company’s risk-adjusted capitalisation over the coming months.
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