LONDON : A.M. Best Europe – Rating Services Limited has revised the outlook to negative from stable and affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb+” of Life Insurance Corporation (International) B.S.C. (c) (LICI) (Bahrain). The revised outlook reflects the ongoing pressures existing on the financial strength of LICI’s ultimate parent, Life Insurance Corporation of India.

The ratings of LICI continue to reflect its strong risk-adjusted capitalisation, sound track record of profit generation and niche market position. The ratings also take into account LICI’s high reliance on its parent for expertise and the lack of any internal enterprise risk management (ERM) framework.

LICI enjoys a niche market position targeting the Indian expatriate community in the Gulf Cooperation Council. Leveraging off of the group’s brand, LICI enjoys an excellent market share of life insurance amongst this growing Indian community in the region.

LICI’s current and prospective risk-adjusted capitalisation is considered by A.M. Best to be strong, despite the deterioration recorded in 2011 as a result of unrealised loses in available for sale investments. The company’s ability to generate capital internally is supported by its long track record of delivering technical profits, which is expected to continue going forward.

A.M. Best remains concerned over the lack of any in-house ERM, with LICI continuing to rely heavily on its parent. In A.M. Best’s opinion, should the expansion plans into previously unexplored markets and types of customers materialise, it will become necessary for LICI to develop stronger internal ERM, actuarial and product engineering capabilities.

Upward rating movement is unlikely at this stage.

Downward rating movement could occur if the company’s risk adjusted capitalisation were to deteriorate to a level not supportive of the ratings, or if the financial strength of Life Insurance Corporation of India were to deteriorate.