A.M. Best Affirms Credit Ratings of New India Assurance Company Limited

Business Wire

SINGAPORE--(BUSINESS WIRE)-- A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of 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 A.M. 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. Its capital and surplus is by far the largest among all non-life insurers in India, standing at INR 359 billion (USD 5.5 billion) as of March 31, 2017. The favorable business profile reflects the company’s solid market position; New India is the largest non-life insurer in India, with a clear lead in almost every line of business. In addition, the company’s business is diversified by geography and line of business, both within India and overseas.

Offsetting rating factors include the susceptibility of New India’s capital position to volatility in India’s stock market, since fair value reserves account for a large portion of its capital. In addition, the company’s operating ratio (pre-tax results before gains and losses from investments) was unfavorable in the two years prior to March 2017. Although there was improvement during the first half of fiscal year 2018, it remains to be seen whether this can be maintained. Nevertheless, the company’s total comprehensive income has been positive due to favorable movements in its equity investments.

Positive rating momentum could result from New India showing a consistent and improving trend 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 A.M. Best’s expectation, 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.

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. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best

Tran Nhat Trung

Financial Analyst

+65 6303 5019

trung.tran@ambest.com

or

Chi-Yeung Lok

Director, Analytics

+65 6303 5016

chi-yeung.lok@ambest.com

or

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

or

Jim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644

james.peavy@ambest.com