TEXT-Fitch affirms Black Gold Re Ltd - Reuters UK
(The following statement was released by the rating agency)
June 28 - Fitch Ratings has affirmed the 'BBB' Insurer Financial Strength (IFS) rating of Black Gold Re LTD. The Rating Outlook is Stable. Black Gold Re's rating (BGRe, or the captive company) continues to reflect the strong linkage and strategic importance of the captive company to Ecopetrol (the parent). The rating also reflects its adequate technical performance, high capitalization, low leverage and strong liquidity ratios. BGRe's rating is tied to the rating of its shareholder, Empresa Colombiana de Petroleos - ECOPETROL S.A. , which has a Fitch local currency Issuer Default Rating (IDR) of 'BBB' with a Stable Outlook. As of Dec. 31, 2011, Ecopetrol's consolidated equity was USD31 billion, EBITDA USD 14 million and a debt-to-EBITDA ratio of 0.3x. BGRe maintains its position as a core subsidiary of Ecopetrol, due to its strategic importance in managing the risks and structuring the insurance coverage of Grupo Empresarial Ecopetrol (Ecopetrol). The support of the shareholder is evidenced by its explicit commitment of support through promissory notes, formal support in managing the investment portfolio of the captive, providing resources for the optimal operation of the reinsurance company, and the transference of strong corporate governance practices. BGRe's operational profitability is adequate for its business profile. As of December 2011 and March 2012, BGRe reported a positive trend in its combined ratio (-30% and -29%) and net income of $13.1 million and $3.4 million, respectively. This performance benefited from the increase in commissions due to the change in the placement scheme carried out from 2011, and also by higher surety bond premiums given the important growth shown by the hydrocarbon sector in the Colombian economy. The quality of the investment portfolio is adequate and the liquidity position is strong. The company places its investment portfolio in liquid assets mainly rated with an International Default Ratings of 'AA' (65%) and 'AAA' (29%). Black Gold has no exposures to fixed assets and stocks, reflected in its strong liquidity ratios of 8.2x as of Dec. 31, 2011 and 18x as of March 31, 2012. Its capital position is strong as a result of adequate profit generation and earnings retention; however, the maximum exposures are high compared to similar companies in the region. As of March 31, 2012, the equity of the captive was USD133 million, exceeding the requirements of the authorities in Bermuda (where the company is registered). Leverage ratios are low; as of March 31, 2012 the retained premiums-to-capital ratio stood at 0.1x and the Liability/Equity ratio at 0.08x. The maximum loss exposure per event is 4.0% of the equity, which is high compared with other similar companies in the region. Moreover, the accepted aggregated exposure for all surety bond policies may represent 2.6% of Ecopetrol's equity given that there is an explicit formal guarantee from Ecopetrol of over 100% of the coverage in these policies. Key rating triggers that may lead to a downgrade include negative changes in the rating of the parent, higher retention levels of equity, and significant deterioration in profitability. An upgrade may be considered with positive changes in the rating of Ecopetrol, the parent company. (Caryn Trokie, New York Ratings Unit)
BJP’s tryst with doom - Deccan Herald
Between the lines
Mohan Bhagwat’s wish for a Hindutva prime minister shows how the RSS does not face the reality of a secular India.
The Bhartiya Janata Party seems to have a tryst with doom. In the wake of scams and scandals in the Congress-run government, the BJP was gaining ground.
Its performance in Parliament was comparatively better and its younger leadership assertive and more meaningful. But once again old RSS men who have been riding the party have brought it back to square one.
First Gujarat chief minister Narender Modi joined issued with Bihar chief minister Nitish Kumar on the concept of secularism and then RSS played the Hindutva card.
Both have scotched even the remotest chance of BJP returning to power. A person who has his hands tainted with the blood of Muslims cannot be projected as India’s next prime minister.
Nor can the false clothes of culture hide the real face of adherents to Hindu Rashtriya concept.
The BJP has, by and large, remained quiet. One if its leaders has spoken out of turn and questioned the very concept of secularism. But he was hushed up quickly. It seems that the party did delude itself with the idea that the Hindu voters were beginning to own the RSS philosophy. The BJP should have learnt the lesson in 2009 when it was all set to win but lost to the Congress.
Political parties, including the Congress, do not understand the new electorate, mostly young. It is liberal in outlook and hates to mix religion with politics. This was the ethos which the nation adopted during the independence struggle and after freedom as a pole star under the leadership of Mahatama Gandhi, Jawaharlal Nehru and Maulana Abul Kalam Azad.
True, regional chauvinism, which is co-terminus with caste and community in certain states, is rearing its ugly head. This is because the Centre looks confused and equivocal when it comes to enunciate policies which demand secular credentials.
Having little feedback from the field, New Delhi continues to monopolise power and fails to appreciate that the decentralisation would infuse life among the people in a state. Regional aspirations have got a new edge in the past years and the locals are fired with confidence that they can sort out their problems themselves and find a consensus quicker than the remote New Delhi does.
This is the reason why Trinamool Congress won in West Bengal and Samajwadi Party in UP. The voters found the parties closer to them and more sympathetic to their problems. Even if these regional parties do not give them a better administration the people are not likely to go back to all India parties which they have found failing them again and again.
They may try another party within the region because they are getting convinced that all India parties are not an answer to their problems of appalling living conditions.
Asserting identity
The idea of India may be pushed further into the background. There may be insurgents and separatists in certain areas to assert the identity of their caste or community, believing that in the affairs of all India politics they may get lost. Much would depend on how New Delhi handles the situation. The Sarkaria Commission on Centre-State relations has become outdated.
Had its recommendations been implemented when the report came out more than two decades ago, the demand by the states to have more powers might not have arisen.
The Centre has to curtail the subjects it has, either voluntarily or through a Constitutional amendment. Apart from defence, foreign affairs, currency and overall financial planning, New Delhi should not have more subjects. Once it decentralises its power, it should ensure that it goes all the way, from the state capital to the district and then to the panchayat so that people themselves participate in governance.
The two main parties, Congress, the BJP and the Left would have problems. The Left does not seem to bother because it is dictatorial in its working. The CPM ousted a member from the party even though he had resigned after supporting Pranab Mukherjee.
The BJP faces a bigger problem because it rules in twice the number of States the Congress does. Leave Modi apart — he is a bull in the China shop — the chief ministers in Madhya Pradesh, Chhattisgarh and Karnataka are too tall to tame. They are leaders of their own communities and command wide influence.
Both parties would have great difficulty for 2014 election, first in choosing the top person and then tackling him or her. The BJP would need more and more assistance of RSS to sort out difficulties with the state leaders. Realising this, RSS chief Mohan Bhagwat has announced that Modi has all the qualifications to become India’s new prime minister.
However, this has naturally infuriated the BJP’s main ally, Janata Dal (United). Its president Sharad Yadav has said that if Modi is the prime minister candidate, the JD(U) would quit the BJP-led National Democratic Alliance.
What is wrong with having a Hindutva prime minister questions Bhagwat. This question itself shows how RSS lives in a world of it own and does not face the reality of secular India. For the BJP, already a divided house, the confusion is more confounded. It realises that the country can never be ruled through a communal agenda.
Even the former prime minister Atal Behari Vajpayee realised this and always put his liberal foot forward. He refused to oust his principal secretary Brijesh Mishra despite the pressure of RSS. But then the BJP’s problem is that it does not have a tall person like Vajpayee to withstand the pressure of RSS.
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