AM Best

A.M. Best Affirms Credit Ratings of Life Insurance Corporation (International) B.S.C. (c)


Michael Dunckley, CFA
Senior Financial Analyst
+44 20 7397 0321

Deniese Imoukhuede
Associate Director, Analytics
+44 20 7397 0277

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


LONDON - OCTOBER 14, 2016 11:31 AM (EDT)
A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” of Life Insurance Corporation (International) B.S.C. (c) (LICI) (Bahrain). The outlook of these Credit Ratings (ratings) is stable.

The ratings of LICI reflect its good, albeit declining, risk-adjusted capitalisation, track record of profit generation and niche market position. Offsetting factors include the lack of an integrated enterprise risk management (ERM) framework and the financial profile of LICI’s ultimate parent, Life Insurance Corporation of India (LIC of India), which has a high level of exposure to the economic and financial system risk associated with India. LIC of India is a state-owned entity.

LICI’s strong level of growth during 2015 eroded the company’s risk-adjusted capitalisation; however, it remains at a good level. Nonetheless, the effectiveness of LICI’s capital management strategy is an area of concern, owing to the extent to which the company’s risk-adjusted capitalisation has diminished in recent years as business expanded. A.M. Best will expect LICI to implement a capital management policy that supports its business plan.

LICI maintains a sound level of profitability, with the company reporting a pre-tax profit of BHD 4.5 million (USD 12.1 million) in 2015 (2014: BD 4.3 million). A diversified global bond portfolio generates a relatively steady investment yield and provides a margin in excess of the guaranteed investment returns required on certain life policies. Additionally, LICI’s performance benefited from a low cost base with an expense ratio of 5.8% in 2015.

LICI also benefits from a niche market position, targeting the Indian expatriate community in the Gulf Cooperation Council (GCC) states by leveraging the LIC of India group’s strong brand and portability of its policies back to India. The company enjoys an excellent market share within the life sector, owing to the growing Indian community in the GCC, and maintains a strong distribution network to support its expansion.

An offsetting rating factor is LICI’s internal ERM capability, which remains at a developing level. As the company expands, it will become increasingly important to evolve its ERM practices, as well as actuarial and product engineering capabilities.

LICI’s financial strength is not considered to be currently affected by the financial profile of its parent, LIC of India. This reflects A.M. Best’s consideration of the regulatory protection in place that restricts the extraction of capital from the insurer, as well as the expectation for LIC of India to be supported by the state thereby reducing the need to place a call on LIC’s capital.

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.

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