KUALA LUMPUR, Oct 19 (Bernama) – A.M. Best has downgraded the Financial Strength Rating (FSR) to B (fair) from B++ (good) and the Long-Term Issuer Credit Rating (Long-Term ICR) to ‘bb+’ from ‘bbb’ of United India Insurance Co. Ltd. (United) India.
A.M. Best said in a statement, the outlook of the FSR has been revised to stable from negative, while the outlook of the Long-Term ICR remains negative.
The downgraded rating reflect United’s diminished risk-adjusted capitalization and its marginal enterprise risk management (ERM) while the negative Long-Term ICR outlook reflects the downside risks to United’s risk-adjusted capitalization and operating performance.
United’s capital position has decreased to a lower-than-expected level of INR 90 billion (US$1.4 billion) as of March 2018 (compared with INR 95 billion in the prior year).
However, the non-renewal of quota-share reinsurance for health and motor third-party business, as well as continued underwriting losses are expected to further reduce United’s capital position and risk-adjusted capitalization.
In addition, the rising equity investment leverage is leaving the company’s risk-adjusted capitalization more vulnerable to equity market fluctuations.
The marginal ERM assessment reflects United’s inadequate capability to manage its reserves, as continued adverse developments have contributed to United’s capital erosion.
The rating agency also concerned about United’s ability to respond to challenges in India’s fast-growing non-life market in a timely and effective manner. More details at www.ambest.com
-- BERNAMA
No comments:
Post a Comment