AM Best confirmed the financial strength rating of B (Fair) and the long-term issuer credit rating of “bb” (Fair) of
The ratings reflect the strength of LICI’s balance sheet, which AM Best considers strong, as well as its adequate operational performance, neutral business profile and weak enterprise risk management (ERM).
The negative outlook reflects the company’s continued failure to meet its regulatory solvency requirement in the
LICI’s assessment of balance sheet strength is supported by its highest level of risk-adjusted capitalization, as measured by Best’s capital adequacy ratio (BCAR). The company’s BCAR strengthened significantly in 2019 and 2020 after a very low level at the end of 2018, driven by an increase in available capital due to capital gains. LICI’s risk-adjusted capitalization was further strengthened in 2021 thanks to a capital injection by its parent company,
LICI has a track record of adequate but volatile operational performance, with a positive, albeit low, five-year average return on equity (ROE) of 1.6% (2016-2020). The five-year average includes an after-tax loss of
LICI benefits from its niche market position, targeting the Indian expatriate community in
LICI’s ERM framework is assessed as weak, due to weak capital management capabilities, demonstrated by the continued violation of regulatory solvency requirements in the
AM Best remains the main rating agency for alternative risk transfer entities, with more than 200 such vehicles rated worldwide. For Best’s current credit scores and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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Source: AM Best