Market Overview

A.M. Best Affirms Credit Ratings of Royal Insurance Corporation of Bhutan Limited


A.M. Best has affirmed the Financial Strength Rating of B+ (Good)
and the Long-Term Issuer Credit Rating of "bbb-" of Royal Insurance
Corporation of Bhutan Limited (RICB) (Bhutan). The outlook of these
Credit Ratings (ratings) is stable.

The ratings reflect RICB's balance sheet strength, which A.M. Best
categorizes as strong, as well as its strong operating performance,
neutral business profile and marginal enterprise risk management (ERM).

RICB's strong risk-adjusted capital position is supported by its
investment portfolio, which mainly comprises loans and deposits. The
company's earnings have been consistently positive, derived primarily
from its sizable portfolio of loans and advances. The neutral business
profile reflects the company's market-leading position in the relatively
small life and non-life markets of Bhutan. RICB is the larger of two
insurance companies in the country and holds a monopoly position in the
life insurance sector in its domestic market.

Offsetting rating factors include RICB's ERM, which is assessed as
marginal. The company has no developed asset-liability management
framework for its life insurance business. The risk of asset-liability
mismatches have been heightened by significant growth in RICB's annuity
business in recent years, which increased the company's reserve leverage
ratio to 2.8 times as of Dec. 31, 2017.

Positive rating actions are unlikely in the near term. Negative rating
pressure could result if risk-adjusted capitalization deteriorates as a
result of adverse operating performance.

Ratings are communicated to rated entities prior to publication.
Unless stated otherwise, the ratings were not amended subsequent to that

This press release relates to Credit Ratings that have been published
on A.M. Best's website. For all rating information relating to the
release and pertinent disclosures, including details of the office
responsible for issuing each of the individual ratings referenced in
this release, please see A.M. Best's
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Best's Credit Ratings
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