A.M. Best Affirms Ratings of General Insurance Corporation of India
14.02.2012 19:53:11 -
(live-PR.com) -
A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of "a-" of General Insurance Corporation of India (GIC Re) (India). The outlook for both ratings is stable.
The ratings reflect GIC Reīs strong risk-adjusted capitalization, its prominent business profile in the Indian and overseas reinsurance markets and the continuous improvement of its expense ratio.
GIC
Reīs capitalization, as measured by Bestīs Capital Adequacy Ratio (BCAR), weakened slightly in fiscal year 2010-2011. GIC Reīs adjusted capital and surplus increased by 10.4% to INR 290 billion (USD 6.37 billion) for the financial year ended March 31, 2011. In contrast, increases in loss reserves for the Indian motor business and loss reserves for various natural catastrophe losses in 2010-2011, as well as net premium growth of 19.8% for the same time period, contributed to the increase in net loss and loss adjustment expense reserve risk and net premium risk. Nonetheless, A.M. Best believes that GIC Reīs capitalization is adequate for its current rating level.
GIC Reīs expense ratio has been improving over the past six years. In fiscal year 2010-2011, the companyīs expense ratio stood at 19%, as compared to 23% in 2009-2010 and 27% in 2005-2006. This improvement was due to continuous reduction in GIC Reīs flat commission, as well as an introduction into profit commission for its proportional business.
GIC Re is the sole domestic reinsurer in India and is able to influence the underwriting discipline of the domestic market. GIC Re emphasizes its customer relationship management and offers risk rating services to its Indian and overseas clients. In fiscal year 2010-2011, GIC Reīs gross premiums from foreign markets increased by 12.1% to INR 47.9 billion (USD 1.05 billion).
Offsetting these positive rating factors is GIC Reīs poor underwriting performance, increasing overseas catastrophe loss exposure and high exposure to equity market volatility.
GIC Reīs combined ratio deteriorated to 109.4% for the financial year ended March 31, 2011 from 107.7% last year. Poor performance of the Indian Motor Third Party Insurance Pool (IMTPIP) is one of the major contributors to the unsatisfactory combined ratio. However, the combined ratio for GIC Reīs major domestic business lines, including fire, has shown improvement over last year.
GIC Reīs growth in its overseas market business in recent years has resulted in increasing overseas catastrophe loss exposure. Global natural catastrophes that occurred in 2011, including the Christchurch and Japanese earthquakes, had a material impact on the loss ratio of GIC Reīs overseas fire business.
For 2010-2011, GIC Re had 53% of its invested assets in equities on the basis of market value as on March 31, 2011. The equity exposure could create pressure on GIC Reīs capitalization; however, A.M. Best believes that the company is well capitalized to absorb this exposure.
The methodology used in determining these ratings is Bestīs Credit Rating Methodology, which provides a comprehensive explanation of A.M.
Bestīs rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include.
"Understanding Universal BCAR"; "Understanding BCAR for Life/Health Insurers"; and "Risk Management and the Rating Process for Insurance Companies." Bestīs Credit Rating Methodology can be found at www.ambest.com/ratings/methodology : cts.businesswire.com/ct/CT?id=smartlink&url= .. .
Founded in 1899, A.M. Best Company is the worldīs oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com : cts.businesswire.com/ct/CT?id=smartlink&url= .. .
Copyright Đ 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
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A.M. Best Co.Jeff Yeung, +852-2827-3413Senior
Financial Analyst jeff.yeung@ambest.com : mailto:jeff.yeung@ambest.com orRachelle
Morrow, +1-908-439-2200, ext. 5378Senior Manager, Public
Relations rachelle.morrow@ambest.com : mailto:rachelle.morrow@ambest.com orMoungmo
Lee, +852-2827-3402General Manager moungmo.lee@ambest.com : mailto:moungmo.lee@ambest.com orJim
Peavy, +1-908-439-2200, ext. 5644Assistant Vice President,
Public Relations james.peavy@ambest.com : mailto:james.peavy@ambest.com
A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of "a-" of General Insurance Corporation of India (GIC Re) (India). The outlook for both ratings is stable.
The ratings reflect GIC Reīs strong risk-adjusted capitalization, its prominent business profile in the Indian and overseas reinsurance markets and the continuous improvement of its expense ratio.
GIC
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GIC Reīs expense ratio has been improving over the past six years. In fiscal year 2010-2011, the companyīs expense ratio stood at 19%, as compared to 23% in 2009-2010 and 27% in 2005-2006. This improvement was due to continuous reduction in GIC Reīs flat commission, as well as an introduction into profit commission for its proportional business.
GIC Re is the sole domestic reinsurer in India and is able to influence the underwriting discipline of the domestic market. GIC Re emphasizes its customer relationship management and offers risk rating services to its Indian and overseas clients. In fiscal year 2010-2011, GIC Reīs gross premiums from foreign markets increased by 12.1% to INR 47.9 billion (USD 1.05 billion).
Offsetting these positive rating factors is GIC Reīs poor underwriting performance, increasing overseas catastrophe loss exposure and high exposure to equity market volatility.
GIC Reīs combined ratio deteriorated to 109.4% for the financial year ended March 31, 2011 from 107.7% last year. Poor performance of the Indian Motor Third Party Insurance Pool (IMTPIP) is one of the major contributors to the unsatisfactory combined ratio. However, the combined ratio for GIC Reīs major domestic business lines, including fire, has shown improvement over last year.
GIC Reīs growth in its overseas market business in recent years has resulted in increasing overseas catastrophe loss exposure. Global natural catastrophes that occurred in 2011, including the Christchurch and Japanese earthquakes, had a material impact on the loss ratio of GIC Reīs overseas fire business.
For 2010-2011, GIC Re had 53% of its invested assets in equities on the basis of market value as on March 31, 2011. The equity exposure could create pressure on GIC Reīs capitalization; however, A.M. Best believes that the company is well capitalized to absorb this exposure.
The methodology used in determining these ratings is Bestīs Credit Rating Methodology, which provides a comprehensive explanation of A.M.
Bestīs rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include.
"Understanding Universal BCAR"; "Understanding BCAR for Life/Health Insurers"; and "Risk Management and the Rating Process for Insurance Companies." Bestīs Credit Rating Methodology can be found at www.ambest.com/ratings/methodology : cts.businesswire.com/ct/CT?id=smartlink&url= .. .
Founded in 1899, A.M. Best Company is the worldīs oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com : cts.businesswire.com/ct/CT?id=smartlink&url= .. .
Copyright Đ 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
A.M. Best Co.Jeff Yeung, +852-2827-3413Senior
Financial Analyst jeff.yeung@ambest.com : mailto:jeff.yeung@ambest.com orRachelle
Morrow, +1-908-439-2200, ext. 5378Senior Manager, Public
Relations rachelle.morrow@ambest.com : mailto:rachelle.morrow@ambest.com orMoungmo
Lee, +852-2827-3402General Manager moungmo.lee@ambest.com : mailto:moungmo.lee@ambest.com orJim
Peavy, +1-908-439-2200, ext. 5644Assistant Vice President,
Public Relations james.peavy@ambest.com : mailto:james.peavy@ambest.com
