A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of General Insurance Corporation of India (GIC Re) (India). The outlook for both ratings is stable.
The ratings reflect GIC Re’s strong risk-adjusted capitalization and business profile in its domestic market.
Favorable capital growth has lifted GIC Re’s capital position to INR 419 billion (USD 6.7 billion) at financial year-end 2015 from INR 261 billion (USD 5.8 billion) at financial year-end 2010. Capital growth has been well in excess of insurance risk, which has increased capital buffers. GIC Re continues to have a strong profile in India’s reinsurance market where it remains the dominant player.
Offsetting rating factors include the poor underwriting performance of GIC Re’s overseas business, which accounts for 42% of its gross premiums. Notwithstanding GIC Re’s strong risk-adjusted capitalization, changes in fair value reserves could result in significant volatility due to the company’s high level of equity investments. Regulatory changes could increase competition for GIC Re in its domestic market. However, amendments are still evolving, and the impact on GIC Re remains to be seen. fii-news.com
