A.M. Best has revised the outlook to positive from stable and affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of The New India Assurance Company Limited (New India) (India).

The revised outlook reflects the company’s overall profitability, which has steadily improved over the past five years. This trend is expected to continue and help to improve earnings quality. Steady capital growth from retained earnings has kept New India’s risk-adjusted capitalization at a level that supports the company’s ratings, and its capital position stood at INR 335 billion (USD5.3 billion) in 2015. The company maintains a clear lead in India’s non-life market in terms of premiums and capitalization, and benefits from brand recognition in the market.

Offsetting rating factors include the company’s combined ratio, which although improving, remains high. Furthermore, the company has significant allocations to equity securities, which increases the company’s exposure to potential valuation fluctuations.

Future positive rating actions could occur if New India continues to improve both underwriting and operating performance, while maintaining its favorable risk-adjusted capitalization.

Conversely, downward rating actions could occur if the company’s operating results and risk-adjusted capitalization deteriorate significantly.

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

This press release relates to rating(s) 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.

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