A.M. Best Affirms Ratings of Life Insurance Corporation (International) B.S.C. (C)

OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has affirmed the financial strength rating of B++(Good) and the issuer credit rating of “bbb+” of Life Insurance Corporation (International) B.S.C. (C) (LIC) (Bahrain). The outlook for both ratings remains stable.

The ratings reflect LIC’s improved and strong risk-adjusted capitalisation, stable financial performance and potential market penetration, offset by its limited financial flexibility.

LIC’s risk-adjusted capitalisation increased significantly in 2007, driven by the significant unrealized gains of BHD 13.8 million (USD 36.57 million). LIC has maintained a “provision for solvency margin” in the life fund. A.M. Best considers this provision to be part of LIC’s risk-adjusted capital, although it is classified for accounting purposes as part of the policyholder’s liabilities. Furthermore, A.M. Best believes that LIC’s risk-adjusted capitalisation will remain stable in 2008 and the financial dependence on its parent company, Life Insurance Corporation of India, will result in limited flexibility.

LIC reported net profits of approximately BHD 1.14 million (USD 3.02 million) at year-end 2007, a near 50% increase on reported net profits of BHD 0.78 million (USD 2.07 million) in 2006. This resulted in a decrease in reserves needed for the company’s life fund from profits on the lapsing of policies at short durations, which was partially offset by growth in new business. A.M. Best expects net profits to rise by nearly 5% in 2008 to BHD 1.7 million (USD 4.48 million) due to a sustainable growth momentum from the new management marketing drive and stable investment income.

LIC has established a dominant position as a provider of USD denominated policies to cater to the insurance needs of the expatriate Indian population residing in the countries of the Gulf Cooperation Council. A.M. Best believes that gross premiums written are likely to be able to sustain a 10% growth in 2007 due to the buoyancy of the insurance market in that region, which will continue to influence the demand for protection products, especially amongst the middle to higher income earners within the under-insured non resident Indian population of the Gulf States.

For Best’s Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.