A.M. Best Affirms Ratings of General Insurance Corporation of India.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of "a" of the General Insurance Corporation of India (GIC GIC See: Guaranteed Investment Contract GIC See guaranteed investment contract (GIC). ) (India). The outlook for both ratings is stable. The ratings of GIC reflect its leading business profile in the Indian reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. market and an expected improvement in underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. performance. An offsetting factor is the pressure on risk-adjusted capitalisation arising from an increase in the proportion of equities in the company's portfolio. A.M. Best believes GIC will retain its leading position within its domestic market despite an expected decline in domestic premium over the medium term with the likely cessation of compulsory cessions from which it currently benefits as India's national reinsurer re·in·sure tr.v. re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. (currently 20% cession The act of relinquishing one's right. A surrender, relinquishment, or assignment of territory by one state or government to another. The territory of a foreign government gained by the transfer of sovereignty. CESSION, contracts. from domestic insurers). Furthermore, A.M. Best expects GIC to increase its acceptance of international emerging market business through its representative offices in London, Moscow and Dubai. A.M. Best anticipates an improvement in the company's combined ratio at year-end March 2006, though still above 100%, following an increase to 111.6% at year-end March 2005 (from 99.1% in the previous year). A.M. Best believes that GIC's risk-adjusted capitalisation, though at an excellent level, is under pressure from its high exposure to the equity markets (with approximately 40% of invested assets at market value in domestic equity). Although GIC's investment portfolio conforms to regulatory guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. , A.M. Best believes that the concentration of the company's investment portfolio in India exposes it to increased credit risk. For Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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