A.M. Best Removes From Under Review and Downgrades Issuer Credit Rating of Life Insurance Corporation (International) B.S.C. (c)
The ratings were placed under review with negative implications on
The downgrade reflects A.M. Best’s opinion that the rating fundamentals of LICI, as analysed under the updated BCRM, are supportive of the revised Long-Term ICR. The ratings reflect LICI’s balance sheet strength, which
LICI’s balance-sheet strength is supported by risk-adjusted capitalisation which, measured by Best’s Capital Adequacy Ratio (BCAR), is considered strong, as well as the company’s highly liquid and diversified investment portfolio, and limited reinsurance dependency. However, LICI’s risk-adjusted capitalisation has declined significantly over recent years, primarily driven by increased capital requirements stemming from strong business growth and increased investment risk. Whilst the company has demonstrated its ability to generate capital organically,
The adequate operating performance assessment is underpinned by a track record of consistent profitability, with a five-year average return on equity of 10.2% at year-end 2016. LICI’s operating performance benefits from a relatively steady investment income, although A.M. best notes that the margin in excess of policyholders’ benefits and guarantees has reduced over recent years. This has been offset somewhat by the company’s increased economies of scale, with a low expense ratio of 5.5% in 2016, and by its strong mortality experience.
Continued expansion translated into a five-year (2012-2016) compound annual growth rate of 27.6%, with gross written premium reaching
ERM is viewed as appropriate considering the complexity of LICI’s operations.
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. For information on the proper media use of Best’s Credit Ratings and
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