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FOR IMMEDIATE RELEASE
LONDON - APRIL 04, 2019 02:41 PM (EDT)
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.
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.
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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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