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A.M. Best Assigns Ratings to National Insurance Company Limited


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© Business Wire 2014
2014-02-25 16:31:01 -

A.M. Best assigned a financial strength rating of B++ (Good) and issuer credit rating of “bbb+” to National Insurance Company Limited (National) (India). The outlook for both ratings is stable.

The ratings reflect National’s strong risk-adjusted capitalization, diversified business portfolio, consistent investment income and its leading position in the India motor insurance sector.

National’s risk-adjusted capitalization level, as measured by Best’s Capital Adequacy Ratio (BCAR), remained strong, which was attributable to its large absolute capital size and the increasingly substantial holding of good quality fixed-income assets. Moreover, the company had achieved consistent and favorable investment income from dividend and interest. Furthermore, National’s auto tie-ups business had contributed approximately 20% of the company’s total premium and experienced strong growth. The partnering strategy with

motor dealers increased the company’s distribution reach and leveraged the customer relationship. In the motor business, National had the largest market share among insurers in India in written premium.

These positive ratings factors are partially offset by the fierce competition in the India market, National’s high equity investment risk, unsatisfactory underwriting result and India's economic risk.

National was under pressure from other government-owned and private competitors with regard to pricing and growth opportunities. The company’s capitalization experienced volatility due to the significant exposure of its investments in the equity market. Current adverse market conditions pose a significant threat to the company’s overall capitalization level. Additionally, National had shown persistently negative underwriting results for several years; therefore, the combined ratio is unlikely to drop below 100% in the intermediate term.
National’s overall operational performance will remain highly reliant on the net investment returns.

Future positive rating actions could result from better motor performance, improvement of loss experience in the health business or strengthening of capitalization in conjunction with growth of business.

Conversely, downward rating actions could occur if the motor and health business deteriorate, or there is a significant decline in the company’s investment asset value.

The methodology used in determining these interactive ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww .. .

Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.



This rating announcement has been issued by A.M. Best Asia-Pacific Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww .. .

Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

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A.M. BestRoy Lee, +852-2827-3418Financial
Analyst roy.lee@ambest.com : mailto:roy.lee@ambest.com Jeff

Yeung, +852-2827-3413Associate Director jeff.yeung@ambest.com : mailto:jeff.yeung@ambest.com Rachelle
Morrow, +1-908-439-2200, ext. 5378Senior Manager, Public
Relations rachelle.morrow@ambest.com : mailto:rachelle.morrow@ambest.com Jim

Peavy, +1-908-439-2200, ext. 5644Assistant Vice President,
Public Relations james.peavy@ambest.com : mailto:james.peavy@ambest.com


Author:
Hossam Abdel-Kader
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