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The credit rating agency AM Best has reaffirmed the financial strength rating of B++ (Good) and the long-term issuer credit rating of “bbb+” (Good) of The New India Assurance Company Limited (New India) with a stable outlook. The rating reflects New India’s strong balance sheet, adequate operating performance, favorable business profile, and marginal enterprise risk management. New India’s balance sheet strength is supported by its risk-adjusted capitalization, which remains at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR).
The company’s investment portfolio is of moderate risk, with a large portion of investments held in domestic government and corporate bonds, which are well-rated on the local scale. However, the balance sheet remains subject to volatility due to the company’s allocation to domestic equity investments.
New India’s operating performance is assessed as adequate, with positive operating results over the past five years. However, the company reported a deterioration in underwriting losses in the fiscal year ending March 2024 due to catastrophe losses and higher claims from its health and motor insurance businesses. Robust investment income continues to contribute to overall earnings.
The company’s business profile is favorably assessed, reflecting its position as the largest non-life insurer in India by gross premiums written. The underwriting portfolio is moderately diversified by lines of business and distribution channels, although with an elevated concentration in health insurance. International geographical diversification is also supported by the company’s overseas operations, including foreign branches, agency offices, and subsidiaries.
However, AM Best assesses the company’s enterprise risk management (ERM) as marginal, citing a gap between the company’s risk management capabilities and the ERM framework. The company’s financial statements have been qualified for several years due to internal control weaknesses, and elevated concerns persist over the company’s pricing discipline and underwriting risk management. Despite these concerns, New India is working to strengthen its ERM framework.