AM Best has revised the credit rating outlooks of General Insurance Corporation of India (GIC Re) to positive from stable.
Outlining the particulars, the rating agency has revised the outlook to positive from stable for the Financial Strength Rating (FSR) and to positive from negative for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the FSR of B++ (Good) and the Long-Term ICR “bbb+” (Good) of GIC Re.
AM Best has also assigned the India National Scale Rating (NSR) of aaa.IN (Exceptional) to GIC Re. The outlook assigned to the NSR is stable.
According to AM Best, these Credit Ratings reflect GIC Re’s balance sheet strength, which it assesses as strong, as well as GIC Re’s adequate operating performance, favourable business profile and appropriate enterprise risk management (ERM).
In addition, the ratings factor in a “neutral impact from the company’s ownership by the government of India.”
AM Best noted that the revision of the Long-Term ICR outlook to positive from negative reflects an improvement in its view of GIC Re’s balance sheet strength and ERM fundamentals.
“Both GIC Re’s risk-adjusted capitalisation and regulatory solvency position have shown sustained improvement over the past three years,” the rating agency said.
AM Best also views GIC Re’s operating performance as adequate, supported by a five-year average return-on-equity ratio of 5.3%.
“Consolidated pre-tax profits (prior to the contribution to catastrophe reserves) showed an improvement in FY 2023 to INR 89 billion (FY 2022: INR 39 billion), having benefitted from the company’s better underwriting and investment results during the year,” the rating agency observed.
AM Best continued, “GIC Re’s underwriting performance improved slightly in FY 2023 compared with FY 2022, although it remained technically unprofitable.
“The improvement was driven by more favourable loss experience in GIC Re’s domestic property, agriculture and health reinsurance segments, although offset by heightened losses to its overseas property catastrophe treaties and motor portfolio.
“Investment income, including realised gains on equity investments, remained a key contributor of overall earnings and has historically made up for the lack of technical profits.”
GIC Re’s business profile is assessed as favourable, as it sits as the 16th-largest reinsurer globally based on gross premium written, according to AM Best’s most recent annual ranking of the top 50 global reinsurers.
