SINGAPORE, March 23 (Bernama-BUSINESS WIRE) -- AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb-” of The Oriental Insurance Company Limited (Oriental) (India). The outlook of these Credit Ratings (ratings) remains negative. Concurrently, AM Best has withdrawn these ratings as the company has requested to no longer participate in AM Best’s interactive rating process.
The ratings reflect Oriental’s balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, neutral business profile and marginal enterprise risk management. The ratings also factor in a neutral impact from the company’s ultimate ownership by the Government of India.
Oriental’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), has exhibited a deteriorating trend over recent years, although it remained at the strongest level for fiscal year-end 2019 (FY 2019). This trend has been driven in part by notable reserve strengthening requirements and elevated new business growth, which have resulted in increased underwriting leverage over recent years. Furthermore, post-tax operating losses and unfavorable fair value movements from equity investments recorded directly in the balance sheet have eroded the company’s capital position. Oriental’s capital and surplus fell by 11% to INR 104 billion (USD 1.5 billion) in FY 2019, as compared with FY 2018. During the first nine months of FY 2020, the company’s capital and surplus declined further to INR 76 billion (USD 1.1 billion).
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