Moody's cut its rating for state-run Life Insurance Corp of India (LIC) two weeks after it put the country's largest portfolio investor under review for a downgrade over its high exposure to sovereign debt and lack of revenue sources outside of India.
The ratings agency downgraded LIC to Baa3 from Baa2 with a stable outlook, in line with its Baa3 sovereign rating for India, which is the lowest investment grade rating. Moody's in December issued a stable outlook for India.
Last month Moody's had put LIC under review for a possible downgrade.
The downgrade of LIC's rating reflects Moody's assessment that its creditworthiness is highly correlated with that of the Indian government's credit strength, the ratings agency said, adding that LIC generates almost all its premiums in India.
"There is little, if any, reason to believe that LIC would be insulated from any government debt crisis, if it were to occur," Moody's said in a statement on Monday.