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

OLDWICK, N.J. -- 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 strong niche position offset by their limited financial flexibility.

LIC's risk-adjusted capitalisation improved in 2006, driven by the significant injection to shareholders' funds of BHD 5 million (USD 13.25 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. Although A.M. Best believes that LIC's risk-adjusted capitalisation will remain stable in 2007, the financial dependence on its parent company, Life Insurance Corporation of India, results in limited financial flexibility.

LIC reported net profits of approximately BHD 0.78 million (USD 2.07 million) at year-end 2006, an 84% reduction on the 2005 reported net profits. However, the 2006 results are historically consistent as 2005 net profits were inflated due to transfers from the life fund. A.M. Best expects net profits to rise by close to 80% in 2007 due to strong premium growth and improved investment income.

LIC has established itself as a niche 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 continue increasing by a strong 15% in 2007 due to the continuing demand for protection products, especially amongst the middle to higher income earners, coupled with the increase in business within the as yet untapped and under-insured non resident Indian population of the United Arab Emirates, notably Dubai.

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 full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com.