Singapore, July 20 (ANI): AM Best has downgraded the financial strength rating of New India Assurance Company Ltd -- the largest player in India's non-life insurance market -- to B-double plus (good) from A-minus (excellent) and the long-term issuer credit rating to bbb-plus from a-minus.
The outlook of these credit ratings has been revised to stable from negative and reflect New India's balance sheet strength which AM Best categorised as very strong, as well as its adequate operating performance, favourable business profile and marginal enterprise risk management.
The rating downgrades follow a revision in AM Best's assessment of New India's enterprise risk management from appropriate to marginal. The company's deficiencies in financial reporting continue to result in audit qualifications.
AM Best said while the company's audited accounts have been qualified for several years as a result of internal control weakness in the reconciliation of certain accounts, the company received two further matters of emphasis from auditors in fiscal-year 2020 related to claims and expense allocation.
"In addition, New India's persistent underwriting losses and volatility raise concern over the company's ability to select and price the risks appropriately," it said.
Whilst the unique features of India's market and the company's role as the government-owned insurer may impact the strategy, AM Best considers New India's enterprise risk management to be below global standards for an organisation of its scale.
AM Best said it continues to view the company's balance sheet strength as very strong. This is supported by its risk-adjusted capitalisation which remained at the strongest level as of March 31 as measured by capital adequacy ratio.
However, New India's capital adequacy has deteriorated compared with the 2019 position, largely as a result of about 30 per cent decline in its capital and surplus. (ANI)