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A.M. Best Removes From Under Review With Negative Implications and Affirms Credit Ratings of National Insurance Company Limited
[December 08, 2017]

A.M. Best Removes From Under Review With Negative Implications and Affirms Credit Ratings of National Insurance Company Limited


A.M. Best has removed from under review with negative implications and affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of "bbb" of National Insurance Company Limited (National) (India). The outlook assigned to these Credit Ratings (ratings) is negative.

On June 23, 2017, National's Long-Term ICR was downgraded, and the company's ratings were placed under review with negative implications following a notice from the regulator that the company has a significant reserve shortfall.

In subsequent discussions, National's management has confirmed that the gross reserve deficiency on its long tail motor third party liability business stood at INR 19 billion as of Sept. 30, 2017 (20% of capital and surplus). This amount will be absorbed gradually in the period to March 31, 2019. Corrective actions taken by management include the appointment of an independent actuarial firm in early 2017 to improve the quality of National's reserving practices. The negative outlooks reflect the inadequate reserves, continued uncertainty regarding the potential for further adverse development and the company's poor underwriting performance over the past five years. In addition, the efficacy of corrective actions taken to strengthen National's reserving and data quality remain to be seen.

Negative rating action could result from a further deterioration in risk-adjusted capitalization and operating performance. A revision to a table outlook could occur if the company's maintains strong risk-adjusted capitalization as its reserving shortfall is amortized in the period to March 31, 2019.



Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on A.M. 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 A.M. 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 A.M. Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating Action Press Releases.


A.M. Best is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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