Skip to main content

HDFC International Life and Re Company Ltd. Assigned 'BBB' Rating; Outlook Stable

  • HDFC International Life and Re Company Ltd. (HDFC Life Re) is a life reinsurance startup based in the Dubai International Financial Centre and regulated by the Dubai Financial Services Authority.
  • While HDFC Life Re's franchise is still in the early stages of development, the company has extremely strong risk-based capital adequacy, albeit constrained by a relatively small capital base in absolute terms.
  • HDFC Life Re has a low risk tolerance in terms of its investment portfolio, with 100% of its assets invested in government bonds and bank deposits, resulting in exceptional liquidity.
  • We are assigning our 'BBB' long-term insurer financial strength rating to HDFC Life Re.
  • The stable outlook reflects our view that HDFC Life Re will maintain its extremely strong capital adequacy and low risk tolerance while gradually increasing its premium base, in both United Arab Emirates and the wider Middle East and North Africa region, and start reporting profitable results on a technical as well as on an overall basis.
DUBAI (S&P Global Ratings) Dec. 10, 2018--S&P Global Ratings today assigned 
its 'BBB' long-term insurer financial strength rating to HDFC International 
Life and Re Company Ltd. (HDFC Life Re). The outlook is stable.


The rating reflects our assessment of the company as a startup reinsurer, 
albeit one operating in the relatively low-risk life reinsurance space, 
supported by extremely strong capital adequacy and abundant liquidity. 

Being a new startup, HDFC Life Re primarily writes life reinsurance business 
only in Gulf Cooperation Council (GCC) countries. However, we expect the 
company's exposure will spread across the Middle East and North Africa (MENA) 
region, with some business coming from the parent, HDFC Standard Life 
Insurance Company Ltd., in India. The life insurance market in the GCC is 
still in the early stages of development. While this presents an opportunity 
for HDFC Life Re, it adds an element of uncertainty regarding its business 
profile's development. The company's business model targets strategic 
partnerships, with a small number of high-profile insurers in each market, 
which may lead to dependence on these insurers in the initial years of 
operation. Our assessment of HDFC Life Re's competitive position factors in 
this concentration, as well as the company's small size in terms of total 
assets and gross premiums. 

We assess HDFC Life Re's capital adequacy as extremely strong and sufficient 
to support its current business volume and risk profile. Our assessment also 
incorporates our expectations for the future, including rapid premium growth 
in the next three years. However, our assessment is moderated by the absolute 
size of HDFC's capital base, with shareholder's equity of about $28.3 million 
that could potentially be sensitive to a single major event.

In our view, HDFC Life Re has a low risk tolerance, supported by its extremely 
conservative investment strategy, with 100% of the investment portfolio 
invested in cash, bank deposits, and government bonds of high credit quality. 
There is no exposure to high-risk assets (equities, real estate, or 
speculative-grade instruments) and no foreign-exchange exposure, because all 
assets and liabilities are denominated in either U.S. dollar or UAE dirham 
(AED), which is pegged to the U.S. dollar.

Our assessment for enterprise risk management (ERM) reflects our view that 
HDFC Life Re has a well embedded risk management culture across the company 
and has established risk controls for almost all areas of risk. The level of 
underwriting risk is still limited, since HDFC Life Re is a startup. However, 
we expect the company's ERM practices will evolve as it increases its size, 
geographic spread, and the complexity of assumed risks. Our assessment of the 
company's management and governance, reflects a limited track record of 
reaching targets to achieve satisfactory profitability. This is partly offset 
by our positive view of the company's risk tolerances and the senior 
management's strong background in terms of their expertise and experience, 
with many senior executives having worked within the wider group for a long 
time.

HDFC Life Re maintains exceptional levels of liquidity by global standards, 
supported by its diverse investments in liquid assets, which are generally 
invested in highly rated instruments. HDFC Life Re's investment strategy 
remained largely cash-oriented, with no bank borrowings or confidence 
sensitive liabilities. As of March 31, 2018, total invested assets of $12.9 
million were 7.5x net life reserves of $1.7 million. We expect the company 
will maintain at least strong liquidity under all realistic scenarios. 

Our ratings on HDFC Life Re are based on its stand-alone credit profile 
because we consider it as insulated from its parent, HDFC Standard Life 
Insurance Company Ltd. (unrated). In our opinion, there are currently limited 
operational and financial dependencies between the two entities. The parent is 
fully committed to preserving the credit strength of the company and we do not 
expect any upstreaming of the already injected capital, even if the parent is 
under stress. Indeed, the capital contained within HDFC Life Re is immaterial 
to the parent. Furthermore, the parent and the subsidiary are conducting 
regulated activities under the supervision of two separate regulators, each of 
which is monitoring the regulatory capital adequacy of the respective 
companies under their supervision. As a result, we think that HDFC Life Re's 
creditworthiness would remain somewhat resilient even if the parent's 
creditworthiness weakened.


The stable outlook reflects our view that HDFC Life Re will maintain its 
extremely strong capital adequacy and low risk tolerance, while gradually 
increasing its premium base in both the United Arab Emirates and the wider 
Middle East and North Africa region, and start reporting profitable results on 
a technical as well as on an overall basis.


We could lower the rating on HDFC Life Re if: 
  • Business growth and geographical diversification does not materialize, contrary to the company's forecasts and our expectations;
  • The company's reliance on single counterparties for revenue generation does not gradually diminish;
  • The company's operational and financial dependence on the parent increases to a level where we believe that a weakness in the parent's creditworthiness could adversely affect the company's financial strength; or
  • Capital adequacy deteriorates below extremely strong levels as a result of earnings volatility, stronger-than-expected premium growth, or the failure of the parent to provide timely capital support when required.
We consider an upgrade unlikely over the next two years because of HDFC Life 
Re's limited scale both in terms of premiums written and capital base. 

TAKE A LOOK AT*

Retrophin, Inc. Credit Rating & Financial Statements Analysis

BOSTON (AC Invest Credit Rating Terminal) Sun Jan 16 2022 11:33:57 GMT+0000 (Coordinated Universal Time) AI Credit Ratings today took the rating actions below: Credit Rating Rationales & Model We do not include potential future debt issuances as a source of liquidity because of the uncertainty of a company's ability to access debt markets in times of financial stress, even for investment-grade issuers. For instance, in the case of a proposed financing, with the intended use of proceeds to repay existing debt, we will assess a company's liquidity excluding the proposed financing until it's obtained or fully underwritten. Rating Model for Retrophin, Inc.: We estimate the credit risk parameters by Money Flow Index (MFI) and ElasticNet Regression Credit Ratings for Retrophin, Inc. as of 16 Jan 2022 Credit Rating Short-Term Long-Term Senior AI Rating Class* Baa2 B3 Semantic Signals 86 48 Financial Signals 66 46 Risk Signals 73 39 Substantial Risks

FIRST SECURITY BANK Credit Rating & Financial Statements Analysis

BOSTON (AC Invest Credit Rating Terminal) Sun Jan 16 2022 11:59:02 GMT+0000 (Coordinated Universal Time) AI Credit Ratings today took the rating actions below: Credit Rating Rationales & Model Larger, investment-grade issuers that have access to both public and private debt markets have greater flexibility than companies that depend solely on private bank loans. In addition, we consider whether a company can borrow on an unsecured basis, has access to the commercial paper markets, and issues debt in multiple geographies. It is more costly to raise debt in the public bond markets and often requires a company to establish a track record among investors. These costs and information asymmetry issues sometimes make it impractical for smaller, speculative-grade issuers to raise small amounts of debt in public markets. Rating Model for FIRST SECURITY BANK: We estimate the credit risk parameters by Rating and Spearman Correlation Credit Ratings for FIRST SECURITY BANK as of 16 Jan 202

Cactus Wellhead, LLC Credit Rating & Financial Statements Analysis

BOSTON (AC Invest Credit Rating Terminal) Sun Jan 16 2022 11:17:02 GMT+0000 (Coordinated Universal Time) AI Credit Ratings today took the rating actions below: Credit Rating Rationales & Model Other factors we consider include a company's frequency of debt issuance and market access, especially during times of company-specific stress or credit market turbulence. Rating Model for Cactus Wellhead, LLC: We estimate the credit risk parameters by KDJ and Multiple Regression Credit Ratings for Cactus Wellhead, LLC as of 16 Jan 2022 Credit Rating Short-Term Long-Term Senior AI Rating Class* B1 B1 Semantic Signals 39 59 Financial Signals 53 88 Risk Signals 70 67 Substantial Risks 53 51 Speculative Signals 89 35 *Machine Learning utilizes multiple learning algorithms to obtain better predictive powers. In our research, we utilize machine learning to combine the results from the Neural Network and Support Vector Machines.

NanoString Technologies Inc Credit Rating & Financial Statements Analysis

BOSTON (AC Invest Credit Rating Terminal) Thu Jan 13 2022 09:07:02 GMT+0000 (Coordinated Universal Time) AI Credit Ratings today took the rating actions below: Credit Rating Rationales & Model Given the earnings volatility companies experience, we have specified for these issuers a more stringent decline in EBITDA percentage for each liquidity category to the extent our cash flow forecasts are not already assuming a downside scenario. Rating Model for NanoString Technologies Inc: We estimate the credit risk parameters by Average True Range (ATR) and Ridge Regression Credit Ratings for NanoString Technologies Inc as of 13 Jan 2022 Credit Rating Short-Term Long-Term Senior AI Rating Class* B1 Baa2 Semantic Signals 60 66 Financial Signals 69 74 Risk Signals 84 72 Substantial Risks 33 76 Speculative Signals 57 90 *Machine Learning utilizes multiple learning algorithms to obtain better predictive powers. In our research, we utilize machine learning to com

Guangzhou Shangpin Home Collection CoLtd Credit Rating & Financial Statements Analysis

BOSTON (AC Invest Credit Rating Terminal) Sat Jan 15 2022 16:26:18 GMT+0000 (Coordinated Universal Time) AI Credit Ratings today took the rating actions below: Credit Rating Rationales & Model Our liquidity uses include dividends and share repurchases that we expect under a stress scenario. Unlike other potential uses of liquidity, such as debt maturities or maintenance capital spending, we view dividends and share repurchases as more discretionary, although more so for the latter. For this reason, when evaluating a company's liquidity position, we may use a lower estimate of dividends and shareholder repurchases than in our base-case forecast based on our views of management and the company's track record in terms of shareholder returns and maintaining a certain minimum level of liquidity. Rating Model for Guangzhou Shangpin Home Collection CoLtd: We estimate the credit risk parameters by Tuned Collector Oscillator and Pearson Correlation Credit Ratings for Guangzho

LONE STAR STATE BANK OF WEST TEXAS Credit Rating & Financial Statements Analysis

BOSTON (AC Invest Credit Rating Terminal) Sat Jan 15 2022 16:17:33 GMT+0000 (Coordinated Universal Time) AI Credit Ratings today took the rating actions below: Credit Rating Rationales & Model Our liquidity uses include dividends and share repurchases that we expect under a stress scenario. Unlike other potential uses of liquidity, such as debt maturities or maintenance capital spending, we view dividends and share repurchases as more discretionary, although more so for the latter. For this reason, when evaluating a company's liquidity position, we may use a lower estimate of dividends and shareholder repurchases than in our base-case forecast based on our views of management and the company's track record in terms of shareholder returns and maintaining a certain minimum level of liquidity. Rating Model for LONE STAR STATE BANK OF WEST TEXAS: We estimate the credit risk parameters by Bollinger Bands Width and Stepwise Regression Credit Ratings for LONE STAR STATE BAN

Adtalem Global Education Inc Credit Rating & Financial Statements Analysis

BOSTON (AC Invest Credit Rating Terminal) Mon Jan 17 2022 05:06:02 GMT+0000 (Coordinated Universal Time) AI Credit Ratings today took the rating actions below: Credit Rating Rationales & Model Our liquidity uses include dividends and share repurchases that we expect under a stress scenario. Unlike other potential uses of liquidity, such as debt maturities or maintenance capital spending, we view dividends and share repurchases as more discretionary, although more so for the latter. For this reason, when evaluating a company's liquidity position, we may use a lower estimate of dividends and shareholder repurchases than in our base-case forecast based on our views of management and the company's track record in terms of shareholder returns and maintaining a certain minimum level of liquidity. Rating Model for Adtalem Global Education Inc: We estimate the credit risk parameters by Ichimoku Cloud (IKH) and Sign Test Credit Ratings for Adtalem Global Education Inc as of 17

Terrabank, National Association Credit Rating & Financial Statements Analysis

BOSTON (AC Invest Credit Rating Terminal) Sat Jan 15 2022 16:17:00 GMT+0000 (Coordinated Universal Time) AI Credit Ratings today took the rating actions below: Credit Rating Rationales & Model If, for example, a facility matured in 18 months, we could include the borrowing availability as a source of liquidity in year one, but exclude the amount in year two under the exceptional and strong descriptors (as well as include any drawn portions as debt maturities under uses of liquidity). This is because we do not assume an extension of bank lines--regardless of the company's perceived credit strength or issuer credit rating. For instance, whether the issuer credit rating on the company is speculative grade or investment grade, we do not assume bank lines will be extended beyond the current stated maturity. Rating Model for Terrabank, National Association: We estimate the credit risk parameters by Price and Paired T-Test Credit Ratings for Terrabank, National Association as o

NSE:GENUSPAPER Stock Forecast, Price Targets (Buy or Sell) | GENUSPAPER Genus Paper & Boards Limited Analyst Ratings

Machine Learning utilizes multiple learning algorithms to obtain better predictive powers. In our research, we utilize machine learning to combine the results from the Neural Network with Rate of Change (ROC) and Lasso Regression. Machine Learning based stock forecast (n+30) for GENUSPAPER Genus Paper & Boards Limited as below: GENUSPAPER Genus Paper & Boards Limited Stock Forecast (Buy or Sell) as of 13 Jan 2022 for (n+30) How Does Forecast Model Work? x axis:Likelihood % y axis:Potential Impact % z axis:Color (yellow to green) Technical Analysis % NSE:GENUSPAPER Stock Forecast Rationales & Analyst Ratings Time series to forecast n: 13 Jan 2022 for (n+30) In these cases, the level of capital expenditures will be lower than estimates in our base-case forecast to determine an issuer's financial risk profile, particularly for companies that are pursuing discrete growth projects that have not been committed or can be easily curtailed in case of a need to pre

LON:RIII Stock Forecast, Price Targets (Buy or Sell) | RIII RIGHTS & ISSUES INV TST PLC Analyst Ratings

Machine Learning utilizes multiple learning algorithms to obtain better predictive powers. In our research, we utilize machine learning to combine the results from the Neural Network with Average True Range (ATR) and Paired T-Test. Machine Learning based stock forecast (n+1y) for RIII RIGHTS & ISSUES INV TST PLC as below: RIII RIGHTS & ISSUES INV TST PLC Stock Forecast (Buy or Sell) as of 15 Jan 2022 for (n+1y) How Does Forecast Model Work? x axis:Likelihood % y axis:Potential Impact % z axis:Color (yellow to green) Technical Analysis % LON:RIII Stock Forecast Rationales & Analyst Ratings Time series to forecast n: 15 Jan 2022 for (n+1y) In determining how prudent a company's risk management is, we look for evidence that management has historically anticipated potential company-specific or market-related setbacks and has taken necessary actions to ensure sufficient liquidity. We estimate RIII RIGHTS & ISSUES INV TST PLC stock forecast parameters by: A

 *AC INVEST | Legal Disclaimer | NYSE | NASDAQ | LSE | NSE |