AM Best Affirms Credit Ratings of the New India Assurance Company Limited

AM Best has affirmed the Financial Strength Rating of A-
(Excellent) and the Long-Term Issuer Credit Rating of “a-” of The 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 AM 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 and the
quality of its investment portfolio. In addition, the company’s capital
and surplus is the largest among all non-life insurers in India,
standing at INR 386 billion (USD 5.9 billion) as of March 31, 2018.

The company’s favorable business profile reflects its solid market
position. New India is the largest non-life insurer in India with a 15%
share of the market, and is a clear leader in almost every line of
business based on gross premium. The company also maintains an
underwriting portfolio that is well-diversified by geography and line of
business, in India and overseas.

Offsetting rating factors include the company’s unsatisfactory
underwriting experience in its key lines of business. Competition in the
motor and health business, as well as insufficient tariff adjustments
for motor third party are the main challenges New India faces in
reducing underwriting losses. However, overall results have been
positive due to income from its large investment portfolio, which was
more than three times its net premium base in fiscal year 2018. Lastly,
New India’s capital and surplus level is susceptible to market
volatility, as its equity investments amount to approximately 70% of its
net worth.

Positive rating momentum could result from New India showing a
consistent improvement 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 AM Best’s
expectations, 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 AM 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 AM 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 AM Best press releases, please view Guide
for Media - Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.

AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20190125005359/en/