NIA’s rating is driven by the company’s leadership position in the Indian general insurance industry, its sound investment portfolio, healthy capitalisation and solvency position, and the strategic importance to and support derived from the parent, the Government of India (GoI). These strengths remain partially offset by the company’s modest underwriting performance
Mumbai: Indian rating agency Crisil Ratings has reaffirmed its Corporate Credit Rating (CCR) on state owned New India Assurance Company (NIA) at ‘Crisil AAA/Stable’.
However the rating agency has revised its outlook on the CCR and subordinated debt issue of another state owned National Insurance Company (NIC) to ‘Negative’ from ‘Stable’ while reaffirming the rating at ‘Crisil AA-’.
It has also downgraded its corporate credit rating on United India Insurance Company Ltd (UII) to ‘Crisil AA-/Negative’ from ‘Crisil AA/Negative’.
New India Assurance
NIA’S rating is driven by the company’s leadership position in the Indian general insurance industry, its sound investment portfolio, healthy capitalisation and solvency position, and the strategic importance to and support derived from the parent, the Government of India (GoI). These strengths remain partially offset by the company’s modest underwriting performance.
NIA’s financial risk profile remains strong, supported by its healthy capitalisation and solvency ratio. On December 31, 2024, the company had a healthy net worth of Rs 21,516 crore and comfortable solvency ratio of 1.90 times. In addition, the company had a substantial balance of Rs 24,991 crore in its fair value change account, said Crisil.
The company’s underwriting performance remains modest, as reflected in the underwriting deficit of Rs 5,083 crore for the nine months ended December 31, 2024 as against Rs 5,225 crore for the same period of last fiscal.
However, its impact on the overall profitability continues to be offset by a steady income from investment. Resultantly, the net profit for the first nine months of fiscal 2025 was Rs 641 crore vis-à-vis a profit of Rs 775 crore for the corresponding period of the previous fiscal, added the rating agency.
National Insurance Company
According to Crisil,the rating action is driven by the lack of improvement in the company’s solvency profile, resulting in the solvency ratio remaining below the regulatory stipulation for a prolonged period now. The reported solvency ratio declined from 0.63 times as on March 31, 2022, to negative 0.53 times (excluding the balance in the fair value change account) as on December 31, 2024, driven by continued underwriting losses.
The underwriting performance of NIC has remained weak, as reflected in a combined ratio of 127.5% for the first nine months of fiscal 2025 and 126.9% for full fiscal 2024, thereby constraining overall profitability.
While the company remains backed by the Government of India, its ability to materially improve the standalone underwriting performance and solvency position hereon, remains a key rating sensitivity factor, said the rating agency.
NIC’s reported networth as on December 31, 2024 and March 31, 2024, was negative at Rs (989) crore and Rs (995) crore, owing to sizable debit balance in profit and loss account. While the balance in the fair value change account provides some offset, the ability to accelerate improvement in the underwriting performance to revive the solvency position remains a key monitorable.
Successive negative accretions to networth have led to a moderation in capital position and significant increase in reliance on equity support from the parent, the Government of India (GoI). Previously, the government had infused Rs 3,700 crore equity into the company in March 2022, over and above the Rs 5,575 crore infused over fiscals 2020 and 2021, added Crisil.
United India Insurance Company
UII’s rating action primarily takes into consideration the lack of improvement in the company’s solvency profile with the solvency ratio continuing to remain below the regulatory stipulation and the company’s weak underwriting performance which, in turn, continues to constrain its earnings profile thereby imposing pressure on its solvency position.
However, following a sustained period of underperformance, the company has begun to exhibit signs of profitability in terms of investment income, reversing a negative trend that has persisted since the past 6-7 fiscals. Net profit was Rs 27 crore during the nine months ended fiscal 2025 as against net loss of Rs 804 crore during fiscal 2024.
The company’s underwriting performance remained weak with the combined ratio remaining high between 120% and 129% during the last 3-4 quarters. The average claims ratio during this period ranged between 92% and 96% during last few quarters (however in recent period claims ratio has reduced to 92.29% for nine months fiscal 2025 from 96.50% in fiscal 2024).
The lower accretion to networth has led to moderation in the capital position and has increased reliance on equity capital support from the government.
As on December 31, 2024, the company’s reported networth was negative Rs 1,528 crore as against negative Rs 1,535 crore as on March 31, 2024.
While some comfort is drawn from the availability of balance in fair value change account (FVCA), the ability to accelerate improvement in underwriting performance to prevent potential pressure on its solvency position remains a key monitorable.