A.M. Best Revises Outlook to Positive for Ratings of The Oriental Insurance Company Limited
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The ratings reflect Oriental's strong risk-adjusted capitalization and improving trend in its underwriting performance.
Oriental recorded a reported surplus of INR 104 billion as at
Oriental's management is committed to improving its underwriting performance. Moreover, improvement in the profitability of its fire and engineering business has been made by providing a risk-based discount and evaluation of surveyors' performance. Profitable segments in the company's motor and health businesses have been identified, while unprofitable segments are written in a prudent manner with loss control measures in place. Oriental also has expanded its preferred provider network in order to reduce the outgo, and it avoids accepting policies at unviable rates for the health business. The overall loss ratio declined to 81.5 percent in fiscal year 2012-13 from 91 percent in fiscal year 2011-12. The improved loss ratio is lower than the industry average.
Offsetting these positive rating factors are the competitive non- life insurance market in
Competition from both private and public insurers remains a challenge for Oriental to achieve satisfactory underwriting results. In the past three fiscal years, Oriental's domestic market share decreased and its combined ratio stayed above 110 percent.
Despite Oriental's consistent and favorable track record of investment returns, Oriental is subject to high investment risk predominantly due to a high proportion of investments in equity securities. As of
Future upward rating actions could occur if Oriental continues to strengthen its capitalization and shows significant improvement in its underwriting performance. Conversely, downward rating actions could occur if the company's risk-adjusted capitalization declines to a level below
The methodology used in determining these interactive ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of
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