A.M. Best Downgrades Issuer Credit Rating of United India Insurance Company Limited

SINGAPORE--(BUSINESS WIRE)-- A.M. Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb” from “bbb+” and affirmed the Financial Strength Rating (FSR) of B++ (Good) of United India Insurance Company Limited (United India) (India). The outlook of the FSR has been revised to negative from stable, while the outlook of the Long-Term ICR remains negative.

The actions taken on these Credit Ratings (ratings) reflect the company’s deteriorating trend in underwriting performance and a continued decline in its risk-adjusted capitalization. In the 12-month period ending March 2017, United India’s combined ratio increased to 134%, driven primarily by adverse experience in its two largest business lines, motor and health. Meanwhile, weak profitability has caused a reduction in United India’s risk-adjusted capitalization. As a consequence, the company has become more susceptible to changes in the fair value of its equity investments.

Recognizing the unfavorable trend in underwriting performance, the company’s new leadership communicated to A.M. Best that it would place a greater emphasis on cutting down group health policies significantly, capping discounts for motor own damage and expediting the settlement of motor third-party claims through multiple conciliatory processes.

Positive rating movement could occur if the company consistently improves its operating performance with support from reserve stability while strengthening its risk-adjusted capitalization. Conversely, further negative rating actions could occur if there is continued deterioration in its operating performance or risk-adjusted capitalization, including as a result of adverse reserve development.

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.

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Source: A.M. Best