KUALA LUMPUR, March 23 -- Global credit rating agency, AM Best has withdrawn the Credit Ratings of National Insurance Company Limited (National) India as the company has requested to no longer participate in AM Best’s interactive rating process.
In the same statement, AM Best has affirmed the Financial Strength Rating of C (weak) and the Long-Term Issuer Credit Rating (Long-Term ICR) of ‘ccc’ of the company, with outlook of these Credit Ratings as negative.
The ratings reflect 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 ratings also factor in a neutral impact from the company’s ultimate ownership by the Government of India.
National’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, deteriorated to a very weak level at fiscal year-end 2019 due to a combination of significant reserve strengthening for motor third-party liability business and continued large underwriting losses from several other product lines.
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 (2015-2019). Underwriting performance has been persistently loss-making, with a five-year average combined ratio of 134.7 per cent (2015-2019) and a very weak combined ratio of 142.8 per cent for fiscal-year 2019.
The negative outlooks reflect AM Best’s expectation of continued pressure on National’s balance sheet strength and operating performance fundamentals over the near term.
More details at www.ambest.com.
-- BERNAMA
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