AM Best has affirmed the Financial Strength Rating of B++ (Good), the Long-Term Issuer Credit Rating of “bbb+” (Good) and the India National Scale Rating (NSR) of aaa.IN (Exceptional) of The New India Assurance Company Limited (New India) (India). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect New India’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, favourable business profile and marginal enterprise risk management (ERM). In addition, the ratings factor in the neutral impact from New India’s ultimate majority ownership by the Government of India.

New India’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which remained at the strongest level at fiscal year-end 2024, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best views that the majority of New India’s reinsurance assets are of good credit quality. In addition, the investment portfolio is of moderate risk. Although a large portion of investments are held in domestic government and corporate bonds, which are well-rated on the local scale, the balance sheet remains subject to volatility arising from the company’s allocation to domestic equity investments.

AM Best assesses New India’s operating performance as adequate. The company has reported positive operating results on a consolidated basis over the past five years, with an average return-on-equity ratio of 2.9% (fiscal years 2020–2024). In the fiscal year ending 31 March 2024, the company reported a deterioration in underwriting losses largely due to catastrophe losses and higher claims arising from its health and motor insurance. Robust investment income, including interest and dividend income, as well as realised gains from the sale of equity investments, continues to provide a sizable contribution to overall earnings. Despite remedial measures, challenging market conditions are likely to constrain the company’s underwriting results over the medium term, albeit overall operating results are expected to remain profitable.

New India’s favourable business profile assessment reflects its market position as the largest non-life insurer in India by gross premiums written. The company’s underwriting portfolio is diversified moderately by lines of business and distribution channels, although with an elevated concentration in health insurance. International geographical diversification is supported by the company’s overseas operations, through its foreign branches, agency offices and subsidiaries. The domestic market continues to present significant growth opportunities for New India, although AM Best considers high market competition, particularly in the health and motor businesses, to be an offsetting factor.

AM Best assesses New India’s ERM as marginal given that the profile of some key risks exceeds the company’s risk management capabilities and the ERM framework continues to evolve. The company’s audited financial statements have been qualified for several years as a result of internal control weakness in the reconciliation of certain items and accounts. Whilst New India is progressing on strengthening internal controls and has partially addressed some audit matters, inadequate resolution of audit matters has impacted the company’s financial reporting quality over a number of years. Elevated concerns persist over New India’s pricing discipline and underwriting risk management given the level of ongoing underwriting losses and the competitive market environment. Overall, whilst New India continues to take actions aimed at strengthening its ERM, there remains a gap between the company’s ERM framework and the global standards for an organisation of its scale.

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

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