New India Assurance has retained its “A-“ financial strength rating and its “a-“ long-term issuer credit grade from ratings agency A.M. Best.
The agency said New India sits on a “very strong” balance sheet, as its risk capitalisations were supported by low underwriting leverage. The firm’s capital and surplus is the largest among India’s non-life insurers, standing at about INR 359bn (USD $5.5 billion) at the end of March last year.
A.M. Best added that New India has a solid market position because of its “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,” the ratings agency said.
However, volatility in India’s stock market may pose a risk for the insurer because of its capital position there. In the two years before March 2015, it also logged unfavourable operating ratios.
A.M. Best believes a consistent and improving trend in New India’s underwriting and operating performance could help boost the insurer’s chances of a ratings upgrade. Conversely, a downgrade might be on the horizon if the company’s risk-adjusted capitalisation declines to a level below the rating agency’s expectations.
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