Market Overview

A.M. Best Downgrades Credit Ratings of National Insurance Company Limited; Places Under Review With Negative Implications


A.M. Best has downgraded the Financial Strength Rating (FSR) to
C++ (Marginal) from B++ (Good) and the Long-Term Issuer Credit Rating
(Long-Term ICR) to "b" from "bbb" of National Insurance Company Limited
(National) (India). Additionally, A.M. Best has placed these Credit
Ratings (ratings) under review with negative implications.

The ratings reflect National's diminished balance sheet strength, which
A.M. Best categorizes as adequate, as well as its marginal operating
performance, neutral business profile and weak enterprise risk
management (ERM).

The company experienced a significant deterioration in its risk-adjusted
capitalization as of the year-end March 2018 filing. Its capital
position fell by 42% due to significantly worse-than-forecast operating
results in multiple major lines of business and a one-time absorption of
the remaining reserve shortfall in its motor third-party liability
business. As a result of its reduced capital position, its equity
investment leverage has increased significantly, further straining
risk-adjusted capital, as measured by Best's Capital Adequacy Ratio
(BCAR). The balance sheet assessment of adequate could be subject to
negative revision pending the progress of initiatives to improve
National's risk-adjusted capital.

National's ERM is not appropriate for its size and complexity and is
assessed as weak. Its financial filings have significantly lagged that
of its peers due to system constraints, which has hampered A.M. Best's
timely access to data. Furthermore, the company has experienced extended
periods without permanent top leadership in the five years prior to
March 2018.

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

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
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Best's Credit Ratings
. For information on the proper media
use of Best's Credit Ratings and A.M. Best press releases, please view
for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating
Action Press Releases

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