Press Release - MARCH 07, 2019

AM Best Affirms Credit Ratings of General Insurance Corporation of India

 Tran Nhat Trung
Financial Analyst
+65 6303 5019

Myles Gould
Associate Director, Analytics
+65 6303 5020

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of General Insurance Corporation of India (GIC Re) (India). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect GIC Re’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).

AM Best has assessed GIC Re’s balance sheet strength as very strong, supported by its risk-adjusted capitalization being at the strongest level, a liquid investment portfolio and a retrocession panel of excellent credit quality. GIC Re benefits from a sizeable capital base, with its capital and surplus standing at INR 523 billion (USD 8.1 billion) as of fiscal year-end March 31, 2018. This significant capital base allows the company to absorb a variety of insurance market stresses. However, the company’s high investment leverage exposes the company’s risk-adjusted capitalization to volatility should financial market instability occur.

GIC Re’s operating performance is assessed as adequate, as the company has recorded a five-year (2014-2018) average return on equity of 6.6%, as calculated by AM Best. GIC relies heavily on investment income derived from its large investment portfolio to generate positive earnings, which offsets the company’s inadequate underwriting performance that continues to generate losses, as demonstrated by a five-year (2014-2018) average combined ratio of 105.4%, as calculated by AM Best. GIC Re’s underwriting performance remains volatile despite improvements from its domestic market in recent years, as foreign business has experienced weaker performance primarily stemming from exposure to global natural catastrophes.

The favorable business profile assessment reflects the company’s pre-eminent market position in India. GIC Re is the country’s main reinsurer, and it holds a significant share of the domestic reinsurance market. The company continues to have close relationships with direct insurers in India, and regulations provide GIC Re with an advantage in obtaining reinsurance placements. In addition, GIC Re maintains a geographically diversified underwriting portfolio, with approximately 29% of business sourced outside of India as of fiscal year-end 2018.

The company’s ERM is viewed as appropriate given the current size and complexity of its operations. However, as the operational scale and complexity of its key risks increase, risk management capabilities will have to improve to be viewed as appropriate in the future.

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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry.

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