AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” (Good) of HDFC International Life and Re Company Limited (HDFC) (United Arab Emirates), a subsidiary of HDFC Life Insurance Company Limited, which in turn is majority held by HDFC Bank Limited. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect HDFC’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

HDFC’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), a history of good internal capital generation and strong liquidity. The primary driver of HDFC’s required capital is underwriting risk, given the company’s exposure to mortality/morbidity risk and relatively low risk investment portfolio. Notwithstanding the company’s ambitious growth plans, AM Best expects HDFC’s risk-adjusted capitalisation to remain at the strongest level. The primary offsetting factor is the limited absolute size of the company’s balance sheet, which makes it more susceptible to volatility.

HDFC has a track record of adequate operating performance, reporting profitable results in four of the past five fiscal years (FY 2021 – FY 2025). Under IFRS 17, the return on equity (ROE), as calculated by AM Best, for FY 2025 and FY 2024 was 4.4% and 5.2%, respectively. Recent underwriting performance of the company’s medical and group life portfolio has been more profitable, although incurred claims were marginally higher in FY 2025, following corrective actions, including improved risk selection taken by management, resulting in (net-net) combined ratios for the short-term portfolio, as calculated by AM Best, of 97.1% and 94.6% in FY 2025 and FY 2024, respectively. Investment income has been modest, albeit stable, indicative of the company’s low risk investment portfolio.

HDFC is a small (re)insurer by global standards, with insurance service revenue of USD 31.0 million at FY 2025. The company specialises in medical, short- and long-term life products and has started to expand into direct retail business in India. HDFC has good geographical diversification across Gulf Cooperation Council countries and has been able to enter the Hong Kong and India markets; however, concentration risk among the cedents within its reinsurance book remains high.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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