A.M. Best has affirmed the financial strength rating of A- (Excellent) and 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 prominent market position within India’s non-life insurance segment.
New India maintains strong risk-adjusted capitalization that is supportive of its ratings. The company continued to post favorable operating results in fiscal year 2013-14, which supported the growth of the company’s capital and surplus over the past three years.
New India's business profile remains strong. The company continues to maintain its leading position in India’s non-life insurance market despite fierce competition from new entrants. New India continues to lead in fire and health insurance business, and ranked second in motor insurance business in terms of direct premium written in India for fiscal year 2013-14.
Offsetting rating factors are New India’s unsatisfactory underwriting performance and high investment risk exposure.
Although New India improved its overall net loss ratio in fiscal year 2013-14, the company’s underwriting results remained negative. The underwriting performance of New India’s core lines of business, motor and health, remained unsatisfactory as pricing for these lines continued to be highly competitive in India.
New India’s equity exposure remained high on market-value basis, with equity accounting for nearly half of the company’s total investments. Adverse movement in the equity market could have negative impact on New India’s capitalization level.
Future upward rating actions could occur if New India demonstrates improved underwriting performance in its local and foreign business while maintaining its solid risk-based capitalization. Conversely, negative rating actions could occur if its operating performance deteriorates, or the market values of its equity investments drop significantly due to financial market shocks, resulting in a decline in the company's risk-adjusted capitalization.
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.
Key insurance criteria reports utilized:
• Catastrophe Analysis in A.M. Best Ratings
• Evaluating Country Risk
• Rating Members of Insurance Groups
• Risk Management and the Rating Process for Insurance Companies
• Understanding Universal BCAR
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.
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