A.M. Best Affirms Ratings of The New India Assurance Company Limited
17 Jan, 2014 02:02 PM
A.M. Best Asia-Pacific Limited has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of "a-" of The New India Assurance Company Limited (New India) (India). The outlook for both ratings is stable.

The ratings reflect New India's strong risk-adjusted capitalization and improving trend in its underwriting performance. New India recorded a surplus of INR 243 billion as at March 31, 2013, which increased from the previous year's surplus of INR 232 billion. New India's risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR), remains solid and is adequate for its current rating level.

New India's business profile remains strong. The company continues to maintain its leading business position in the domestic market, as well as demonstrate its ability to expand its overseas business. New India continues to lead in generating fire, marine and health insurance business, resulting in the total gross premiums (global) increasing to INR 129 billion in fiscal year 2012-2013, from INR 122 billion in fiscal year 2011-2012.

Both New India's underwriting performance and its loss ratio improved in fiscal year 2012-2013, with the loss ratio decreasing to 86% from 90% in fiscal 2011-2012. These improvements are driven by the company’s underwriting and claims control initiatives.

Offsetting rating factors are the competitive non-life insurance market in India, New India's high investment risk and the impact from India's slowing economic growth.

New India is under pressure from other government-owned and private competitors with regard to its market share, which declined in fiscal year 2012-2013.

Despite New India's consistent and favorable track record of investment returns, it is subject to high investment risk predominantly due to a high proportion of investments in equity securities. As of March 2013, the market value of New India's equity investments was equivalent to nearly half of its investment assets. Extreme investment market conditions could have a material impact on New India's risk-adjusted capitalization.

Future upward rating actions could occur if New India achieves a consistently favorable underwriting and operating performance, as well as improves its capitalization. Conversely, negative rating actions could occur if the company's risk-adjusted capitalization declines to a level below A.M. Best's expectations or if its operating performance deteriorates significantly.

The methodology used in determining these interactive ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
Source : Fort Mill Times

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