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Best’s News & Research Service - January 04, 2024 12:25 PM (EST)

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

  • January 04, 2024 12:25 PM (EST)
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London //BestWire// - AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb” (Fair) of Life Insurance Corporation (International) B.S.C. (c) (LICI) (Bahrain). The outlook of these Credit Ratings (ratings) is stable.

These ratings reflect LICI’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and weak enterprise risk management (ERM).

LICI’s balance sheet strength assessment is underpinned by the strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), albeit the BCAR decreased in 2022, driven by material operating losses for that year. Moreover, volatility in LICI’s capital adequacy and its high level of sensitivity to financial markets remain offsetting factors to its balance sheet strength assessment. However, AM Best expects the company’s prospective capital adequacy to demonstrate greater resilience following a capital injection from its parent company, Life Insurance Corporation of India (LIC of India), and internal capital generation.

LICI’s operating performance has weakened in recent years, as evidenced by a five-year (2018-2022) weighted average return-on-equity ratio (ROE) of -9.8%. The company has historically returned positive operating results; however, it demonstrated a material loss in 2022, resulting in a -26.6% ROE. Operating performance has proven sensitive to financial market movements, as well as bonus rates credited to policyholders. An operating profit of BHD 4.5 million has been reported for the first 9 months of 2023.

LICI benefits from its niche market position, targeting India’s expatriate community in the Gulf Cooperation Council states by leveraging LIC of India’s strong brand in the region, as well as the portability of its policies back to India.

LICI’s ERM framework is assessed as weak, which has been evident through poor capital management capabilities in recent years. Furthermore, the company’s risk management has proven to be more reactive than proactive, with remedial actions having taken extended periods of time to be executed. AM Best expects LICI to continue to formalise and enhance its risk management framework and capabilities.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

International London Market Bahrain Press Release United Kingdom A.M. Best Rating Services, Inc. Insurance Best's Credit Rating Action Life Insurance

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