A 'positive' outlook indicates that a rating may be raised while a 'negative' outlook indicates that a rating may be lowered, RAM said.
"The Rating Watch was triggered by the suspension of its license by the Insurance Board of Sri Lanka (IBSL) owing to non-compliance with regulations," the rating agency said in a statement.
Janshakthi has appealed the decision.
The Rating Watch will be resolved once more information in this regard comes to light.
A 'rating watch' indicates a possible change in the rating usually within six months or less, rating analysts say.
A rating watch is triggered by a specific event, and will be resolved when more information is available. Once a watch is resolved, the rating may also be left unchanged.