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FOR IMMEDIATE RELEASE
HONG KONG - AUGUST 28, 2015 01:19 PM (EDT)
A.M. Best has affirmed the financial strength rating of B+ (Good) and the issuer credit rating of "bbb-" of Royal Insurance Corporation of Bhutan Limited (RICB) (Bhutan). The outlook for both ratings is stable.
The ratings reflect RICB's adequate risk-adjusted capitalization, consistently favorable operating performance and its dominating market position in Bhutan.
RICB's capital and surplus has registered healthy growth in the five-year period from 2010 to 2014, driven by its profitable underwriting and strong investment income. The company has developed its reinsurance inward business from the domestic and foreign markets for an alternative income source over recent years.
RICB is one of two insurance companies in Bhutan and primarily engages in insurance, reinsurance and the lending business. The company has a monopoly on life and group insurance in Bhutan. With an established leading market position, RICB continues to capture the majority market shares of the general insurance market.
Partially offsetting these positive rating factors are RICB's high debt leverage and Bhutan's economic environment.
RICB's debt-to-capital ratio was relatively high, and A.M. Best anticipates that this leverage will remain high in the near term due to its lending activities. However, the risk associated with the lending activities is relatively low as most of the loans are secured with collateral under strict control.
Bhutan's economic growth continued to be moderate in 2014. The limited market and relatively small financial sector has posted challenges to the growth of RICB.
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to rating(s) 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 visit A.M. Best's Ratings & Criteria Center.
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