The New India Assurance Co Ltd has received a rating of AAA from Crisil, reflecting the companys strength to meet its obligations to policy holders. New India becomes the first insurance company in the country to receive the highest financial strength rating.
The rating also factors in New Indias strong market position, adequate level of reinsurance with highly rated international reinsurers, and protection provided by the regulatory framework, said D Sengupta, chairman and managing director, New India Assurance, at a press conference held in Mumbai yesterday.
The high rating will help the company, which has a presence in 22 countries, to secure reinsurance business at competitive rates, he added. Incidentally, with the rating of the insurance company, Crisil now covers the entire range of the financial sector in its coverage.
Talking about the proposed deregulation of the insurance industry, Sengupta said that the ability to contain expenses and enhance retail penetration would be the crucial determinants of competitive advantage in a liberalised scenario. New India has already initiated steps to reduce its expenses through streamlining of operations, restructuring of offices, redeployment of employees and computerisation at various levels, he said.
Speaking on the occasion, R Ravi Mohan, managing director, Crisil, pointed out that the rating for New India Assurance was based on extremely stringent accounting norms. This is a different kind of rating from the usual product rating in that we had to take into account the financial strength of the company to meet its obligations to the policy holders, he said.
Crisil had, while deciding the rating, taken into consideration factors like business risk, financial risk, regulatory risk and competition. New India Assurance has a strong asset quality and conservative portfolios.
The regulatory environment has helped its profitability though the motor insurance business is a loss-making one, Ravi Mohan added.
In view of the likely competitive scenario in the insurance business, Crisil has taken into account the impact of competition on productivity, customer service and levels of computerisation, he added.
