KUALA LUMPUR, Aug 29 -- AM Best has removed from under review with negative implications and downgraded the Financial Strength Rating to C (weak) from C++ (marginal) and the Long-Term Issuer Credit Rating to ‘ccc’ from ‘b’ of National Insurance Company Limited (National), India.
With negative outlook assigned to these ratings, it reflects National’s balance sheet strength, which AM Best categorised as weak, as well as its marginal operating performance, neutral business profile and weak enterprise risk management.
The rating downgrades reflect a deterioration in the company’s balance sheet strength fundamentals. Its capital and surplus have declined significantly by 51 per cent to INR28 billion (US$401 million) as of March 31. (INR100 = RM5.87)
Its capital position has continued to deteriorate, the previously anticipated capital support from the Government of India has yet to materialise, and there is limited visibility on the progress of this capital injection plan.
AM Best views the company’s operating performance as marginal, as evidenced by a five-year average return-on-equity ratio of -6.7 per cent (2015 to 2019).
Inadequate pricing on key lines of business and reserve strengthening over the past three fiscal years has been the primary driver of the company’s poor underwriting results.
AM Best is a global rating agency and information provider with unique focus on the insurance industry. More information at www.ambest.com.
-- BERNAMA
-- BERNAMA
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