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Saturday December 29, 12:13 PM
A.M. Best Revises Outlook to Stable from Negative for General Insurance Corporation of India |
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Oldwick, New Jersey, United States, Saturday, December 29, 2007 -- (Business Wire India) -- A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating (ICR) of "a-" of General Insurance Corporation of India (GIC) (India). The outlook for both ratings has been revised to stable from negative.
The ratings reflect the revision of India's Country Risk Tier by A.M. Best and GIC's superior risk-adjusted capitalization.
A.M. Best has revised the Country Risk Tier of India to Tier III from Tier IV. The revision indicates A.M. Best's opinion that the impact of country-specific risk factors, which might negatively affect GIC's financial strength and ability to meet its financial obligations, has been lowered.
GIC's adjusted capital and surplus (including unrealized capital gains) stood at INR 158 billion (USD 3.6 billion) as at March 31, 2007. The company's risk-adjusted capitalization is superior as demonstrated by Best's Capital Adequacy Ratio. However, the company's risk-adjusted capitalization is highly exposed to the Indian equity market, given 50% (at market value) of its invested assets was in equities.
Offsetting factors are the negative underwriting performance result and the subsequent reliance on investment income to generate profits.
GIC still recorded underwriting losses in 2006-2007, although the underwriting losses decreased to INR 750 million (USD 17 million) from INR 12,609 million (USD 290 million) in 2005-2006. According to the company's forecast, the combined ratio will improve but still remain above 100% in the next three years. Should the underwriting performance deteriorate, the company's ratings would be under pressure.
GIC is heavily reliant on investment income to offset its underwriting losses. However, the investment income performance is dependent on the Indian equity market.
For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.
Media contact details
CONTACT:
A.M. Best Co.
Analysts:
Billy Kwan
+852-2827-3405
billy.kwan@ambest.com
or
Moungmo Lee
+852-2827-3402
moungmo.lee@ambest.com
Or
Public Relations:
Jim Peavy
+1 908-439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Morrow
+1 908-439-2200, ext. 5378
rachelle.morrow@ambest.com
CONTACT:
A.M. Best Co.
Analysts:
Billy Kwan
+852-2827-3405
billy.kwan@ambest.com
or
Moungmo Lee
+852-2827-3402
moungmo.lee@ambest.com
Or
Public Relations:
Jim Peavy
+1 908-439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Morrow
+1 908-439-2200, ext. 5378
rachelle.morrow@ambest.com
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