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SINGAPORE–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of C (Weak) and the Long-Term Issuer Credit Rating of “ccc+” of Royal Insurance Corporation of Bhutan Limited (RICB) (Bhutan). These Credit Ratings (ratings) remain under review with negative implications. Concurrently, AM Best has withdrawn these ratings as the company has requested to no longer participate in AM Best’s interactive rating process.

The ratings reflect RICB’s balance sheet strength, which AM Best categorizes as weak, as well as its adequate operating performance, neutral business profile and marginal enterprise risk management.

RICB’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), declined to a weak level in 2018 and is expected to remain subject to significant pressure and volatility over the near term. This was driven principally by a provision for non-performing loans arising from its credit finance business. The company continues to exhibit a very high concentration of exposure to retail and commercial loans in Bhutan, with the performance of these assets in part correlated to economic conditions in the country.

In addition, concern has arisen regarding the company’s ability to strengthen its capital adequacy in a timely manner and comply with local regulatory solvency requirements on an ongoing basis. As of year-end 2018, the company’s regulatory capital adequacy ratio was below the minimum requirement. Regulatory restrictions and intervention have not occurred to date; however, this risk remains over the near term.

While RICB’s insurance operations remain profitable, its credit finance business has impeded overall operating results materially. The company’s management team continues to execute remedial actions aimed at improving the prospective performance of its loan portfolio, including strengthening enforcement of collections, loan refinancing and tighter underwriting controls. While AM Best views these actions positively, near-term operating results are expected to be subject to a heightened level of volatility arising from potential changes in provisions or write-offs for non-performing loans.

The under review with negative implications status reflects AM Best’s expectation of near-term volatility in the company’s balance sheet strength and operating performance, as well as the potential for further deterioration in these key rating fundamentals.

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

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

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Yi Ding
Financial Analyst
+65 6303 5021

Myles Gould
Director, Analytics
+65 6303 5020

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644