Ratings of three PSU insurers downgraded

The capital infusion required may be just some Rs 5,000 crore which is indeed small compared to the Rs 70,000 crore reportedly given to PSU banks,' said former IRDA Member KK Srinivasan. The downgrade has come after Budget 2019-20 in July proposed the enabling provision for merger of non-life insurance firms by seeking to amend the General Insurance Business Nationalisation Act. AM Best downgraded the financial strength rating of National Insurance to C (weak) from C++ (marginal) and the Long-Term Issuer Credit Rating to CCC from B. The company's risk-adjusted capitalisation, as measured by Best's Capital Adequacy Ratio (BCAR), deteriorated to a very weak level at fiscal year-end 2019 due to a combination of significant reserve strengthening for motor third-party liability business and continued large underwriting losses from several other product lines, AM Best said. 'Capital and surplus declined significantly by 51 per cent to Rs 2800 crore as of March 31, 2019, from Rs 5,700 crore in the same prior-year period,' it said. Furthermore, the company's net underwriting leverage and equity investment leverage has surged to a very unhealthy level at 1,091 per cent and 385 per cent, respectively. In the case of United India, AM Best has downgraded the Financial Strength Rating (FSR) to C++ (Marginal) from B (Fair) and the Long-Term Issuer Credit Rating to 'B+' from 'BB+' for United India Insurance Company Ltd. The credit rating reflects the company's balance sheet strength, which AM Best categorises as adequate, marginal operating performance, neutral business profile and marginal enterprise risk management. The rating downgrades reflect a deterioration in AM Best's view of United's balance sheet strength and operating performance fundamentals. Capital and surplus declined significantly by 29.1 per cent to Rs 6,400 crore as of March 31, 2019, from Rs 9010 crore in the same prior-year period. The company repeatedly has fallen short of local minimum regulatory solvency requirements in recent years, AM Best said. The rating firm has downgraded the FSR to B+ (Good) from B++ (Good) and the Long-Term Issuer Credit Rating to BBB- from BBB+ of Oriental Insurance Company. The credit ratings reflect Oriental's balance sheet strength, which AM Best categorises as very strong, marginal operating performance, neutral business profile and marginal enterprise risk management (ERM). DailyhuntDisclaimer: This story is auto-aggregated by a computer program and has not been created or edited by Dailyhunt. Publisher: The Indian Expresshttp://wiznotes.com/UserProfile/tabid/84/userId/256690/Default.aspx