AM Best Affirms Credit Ratings of HDFC International Life and Re Company Limited
- November 06, 2026 08:52 AM (EST)
//BestWire// - 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 BCAR scores in fiscal-year 2026 (FY) decreased from prior year, primarily due to significant growth in the health reinsurance business. Notwithstanding the company’s growth plans, AM Best expects HDFC’s risk-adjusted capitalisation to remain comfortably at the strongest level. The primary driver of HDFC’s required capital is underwriting risk, given its exposure to mortality/morbidity risk and relatively low risk investment portfolio. An offsetting factor is the limited absolute size of HDFC’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 last five fiscal-years (FY 2022 – FY 2026). Under IFRS 17, the return on equity (ROE), as calculated by AM Best, for FY 2026 and FY 2025 was 1.6% and 4.4%, respectively. Recent underwriting performance has been impacted by a deterioration in the loss ratio of select reinsurance lines of business, with the company reporting a combined ratio of 101% for the short-term business in FY 2026. The performance in FY 2026 was also adversely impacted by high profit commissions and other technical fees. Nevertheless, investment income continued to support overall results, albeit modestly, reflecting HDFC’s low risk investment portfolio. Furthermore, it is expected that the direct retail business in India will profitably support the company’s earnings profile in the coming years.
HDFC is a small, niche (re)insurer by global standards, with insurance revenue of USD 39.6 million in FY 2026. The company specialises in medical, short- and long-term life products and is expanding into direct retail business in India. HDFC has good geographical diversification across Gulf Cooperation Council countries; however, concentration risk among the cedents within its reinsurance book, although improving, remains material.
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 (BCR), Best’s Performance Assessments (PA), Best’s Preliminary Credit Assessments (PCA) and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.