The revised outlook reflects the continued deterioration in UIIC’s underwriting performance. While its overall results remain positive, the company has consistently failed to meet its own projections in underwriting performance. Another negative Credit Rating (rating) factor is UIIC’s high market risk from its equity portfolio, exposing the company’s capital and surplus to the high volatility of India’s stock market. In particular, UIIC’s capital and surplus dropped 14% during fiscal year 2016, largely driven by the decline in fair value of its equity investment.
Nevertheless, the company’s balance sheet remains strong and is supported by solid risk-adjusted capitalization, as measured by Best’s Capital adequacy Ratio (BCAR), the good liquidity of its investment portfolio and its adequate reinsurance program.
Further negative action could occur if no significant improvement in underwriting materializes or if there is material deterioration in risk-adjusted capital due to negative fair value movements. A revision to a stable outlook could occur if the company can significantly improve and sustain underwriting performance while maintaining its solid risk-adjusted capitalization.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to Credit Ratings 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 see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
Copyright © 2016 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.
Associate Financial Analyst
Chi-Yeung Lok, +65 6589 8400, ext. 211
Senior Financial Analyst
Manager, Public Relations
Assistant Vice President, Public Relations