SINGAPORE--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of The New India Assurance Company Limited (New India) (India). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect New India’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management.
New India’s balance sheet strength reflects solid risk-adjusted capitalization that is supported by low underwriting leverage and the quality of its investment portfolio. In addition, the company’s capital and surplus is the largest among all non-life insurers in India, standing at INR 386 billion (USD 5.9 billion) as of March 31, 2018.
The company’s favorable business profile reflects its solid market position. New India is the largest non-life insurer in India with a 15% share of the market, and is a clear leader in almost every line of business based on gross premium. The company also maintains an underwriting portfolio that is well-diversified by geography and line of business, in India and overseas.
Offsetting rating factors include the company’s unsatisfactory underwriting experience in its key lines of business. Competition in the motor and health business, as well as insufficient tariff adjustments for motor third party are the main challenges New India faces in reducing underwriting losses. However, overall results have been positive due to income from its large investment portfolio, which was more than three times its net premium base in fiscal year 2018. Lastly, New India’s capital and surplus level is susceptible to market volatility, as its equity investments amount to approximately 70% of its net worth.
Positive rating momentum could result from New India showing a consistent improvement in its underwriting and operating performance, while maintaining its very strong risk-adjusted capitalization.
Conversely, negative rating actions could occur if the company’s risk-adjusted capitalization declines to a level below AM Best’s expectations, or if its operating performance deteriorates significantly.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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