Credit Ratings of Ricbl Downgraded

The Financial StrengthRating of the RoyalInsurance Corporation ofBhutan Limited (RICBL)has been downgraded to B-(Fair) from B+ (Good) andthe Long-Term Issuer CreditRating to 'bb-' from 'bbb-'by AM Best.AM Best, which is aglobal rating agency andinformation provider witha unique focus on theinsurance industry, has alsoplaced these Credit Ratings(ratings) under review withnegative implications.RICBL's Chief ExecutiveOfficer (CEO), Karma,said the rating has beendowngraded because in2018 the company was notperforming well in termsof loan.

'The company hashigh Non-Performing Loan(NPL) and it has increased ascompared to previous year,'he said.However, he said it istemporary phenomena andthat the company will notincur any losses on this issue.The CEO added thatthey have formed a task forceteam.

The team will workwith the borrowers to findways to recover the money.

'Iam confident that the moneywill be recovered, which isa matter of time, unlike anormal loss like insuranceloss which the companyhas to pay in millions andthe amount will never berecovered,' Karma said.Further, the CEOsaid RICBL's financialperformance in 2019 will bemuch better.'The rating has reflectedthat the rating has beendowngraded only from 'bbb'to 'bb-'. If the impact on thefinancial balance sheet andincome is more prominentthen the grading will be verylow,' he added.

'As a CEO I am notworried about the ratingbeing downgraded. Ourprofitability of the companyhas been affected becauseour bowers could not payback on time. Not becausethey are not importantbecause we feel confidentthat we will get the moneyback,' Karma said.According to the CEO,they have also put in placemeasures to improve thecredit management system.By March end this year theyhave targeted to reduce theNPL to 15% and by Junereduce the NPL to 10% andby December reduce the NPLto 5%.Karma said the NPL wasnot performing well in 2018because the economy was notvibrant and also people paidloan at the end of the year.'But the cash flow was notthere and people cannot payat the end of the year also,'he said, adding that RICBLhas Nu...