“POOR UNDERWRITING PERFORMANCE” HITS NEW INDIA OUTLOOK

Rating Agency AM Best has revised its outlook on state owned New India Assurance to “negative” from “stable”, citing a “continued poor underwriting performance”, a heavy reliance on investment income and a significant exposure to the Indian equity market. However, the financial strength rating of single A minus was maintained. AM Best said that the rating action followed a revision of India’s Country Risk Tier, which has been moved from Tier III to Tier IV. AM Best noted that, although New India’s risk-adjusted capitalisation was strong in financial year 2006-07, its 48% weighting in Indian equities meant that any downturn would “exert pressure” on the strength of that capitalisation. AM Best also noted that, although New India’s underwriting losses continued, they had decreased to Rp6.5bn ($150m) in financial year 2006-07, from Rp11.9bn the previous financial year. The company has promised that the ratio will fall below 100% by 2010, stating that claims experience will improve.