The Royal Insurance Corporation of Bhutan Limited (RICBL), the oldest and largest insurance company in Bhutan, was rated on its financial strength and an issuer credit rating by A.M. Best Asia-Pacific Limited which was announced at a conference held in the RICBL head office in the capital yesterday.
RICBL was assigned a financial strength rating of B+ and an issuer credit rating of bbb by A.M. Best Asia-Pacific Limited, raising yet another milestone in the history of RICBL. The outlook assigned to both ratings is stable.
Financial strength rating B+ means ‘Good’, company is secured, which means it is assigned to companies that have a good ability to meet their ongoing insurance obligations.
Issuer credit rating bbb means ‘Good’, it is assigned to insurance companies that have a good ability to meet their ongoing senior financial obligations and negative indicates possible rating downgrade due to unfavorable financial and market trends relative to the current rating level.
Chief executive officer of RICBL Namgyel Lhendup said, “The rating is very good and it is well rated. It signifies the strength of the business. RICBL thinks to do business with the international market once government approves. “
“ RICBL has lots of opportunities to do business in the international market, in order to bring capital from outside world and pump into our economy, and also to ease the capital problem in our country,” he said.
He added that when RICBL takes risk from highly reputed companies, this rating will gain trust for international companies to invest in Bhutan.
Executive director of RICBL Sonam Dorji said, “It is an important milestone of RICBL. When it is rated in the global market, it gives confidence to the global market to invest in Bhutan.
“He said the size does not matter when it comes to rating, and that the rating is purely based on quality and efficiency of business.
The rating is an important barometer for stakeholders to gauge the RICBL’s efficiency, financial security and overall credibility.
The rating also signifies RICBL’s adequate risk-adjusted capitalization, favorable operating performance, investment income and rating also reflects RICBL’s human resource capacity, dominance in the market and its competency to engage in business in the global insurance market.
Credit ratings are assigned from an in-depth evaluation of a company’s balance sheet strength, operating performance and business profile, and it means that RICBL has the ability to pay claims and fulfills all financial obligations.
The credibility and quality of an insurance company are accessed based on the capacity to settle the claims on time and adequately.
The rating also indicates that RICBL has been able to achieve strong operating income over the past five years, and how it has managed to maintain its combined ratio at a five-year average of 75%.
The profitable underwriting and investment results have contributed to the growth in RICBL capital base, which was over Nu 1.5 bn as of 2012 and Nu 1.7 bn as of date.
RICBL is well -positioned for its current rating level. Negative rating actions could occur if RICBL’s operating performance deteriorates and there is a substantial decline in its risk-based capitalization level.
A.M Best Asia-Pacific Limited is a subsidiary of A.M. Best Company which is the world’s oldest and most authoritative insurance rating and information source. A.M Best Asia-Pacific Limited office is based in Hongkong. Around 3,500 companies have been rated around the world by the company.