SINGAPORE, March 4 (Bernama-BUSINESS WIRE) — AM Best has downgraded the Financial Strength Rating to B- (Fair) from B+ (Good) and the Long-Term Issuer Credit Rating to “bb-” from “bbb-” of Royal Insurance Corporation of Bhutan Limited (RICB) (Bhutan). Additionally, AM Best has placed these Credit Ratings (ratings) under review with negative implications.
The rating downgrades reflect a deterioration in AM Best’s view of RICB’s balance sheet strength fundamentals. While RICB has yet to finalize its year-end 2018 financial statements, AM Best expects the company to record an operating loss for the year, driven by a provision held against non-performing loans arising from its credit finance business. The impact of the operating loss is anticipated to result in a significant reduction in RICB’s reported shareholders’ equity, which AM Best expects will lead to weakened risk-adjusted capitalization at year-end 2018, as measured by Best’s Capital Adequacy Ratio (BCAR). In addition, the latest rating actions reflect concern over the company’s liquidity position and its ability to strengthen its capital base, as well as to comply with local regulatory solvency requirements.