A.M. Best has affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb+” of National Insurance Company Limited (National) (India). The outlook for both ratings is stable.
The ratings consider National’s strong risk-adjusted capitalization, overall profitability and strong presence in the non-life insurance market in India.
National’s ratings are supported by its strong risk-adjusted capitalization. Premium leverage remains moderate as continued overall profitability, supported by investment results, has helped the company to grow its capital. Its capital position stood at INR126 billion (USD 2 billion) at financial year-end 2015. National remains the second largest direct non-life insurer in India’s market.
Offsetting factors include unsatisfactory underwriting results and the susceptibility of its capital position to fair value movements. National’s overall capital growth has relied significantly on investment results due to poor underwriting results, with its large and growing health portfolio being a major loss-generating segment.
A high proportion of National’s capital and surplus consists of its investment fair value reserves, and its risk-adjusted capitalization could be subjected to significant volatility.
Positive rating momentum could result from consistent improvement in underwriting and operating performance, while maintaining its good risk-adjusted capitalization. Conversely, downward rating actions could occur from a deteriorating trend in operating performance due to worsening underwriting or declining investment results.
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to rating(s) 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.
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