AM Best downgrades credit ratings of Oriental Insurance Company Limited

KUALA LUMPUR, Aug 29 (Bernama) -- AM Best has downgraded the Financial Strength Rating (FSR) to B+ (good) from B++ (good) and the Long-Term Issuer Credit Rating (Long-Term ICR) to ‘bbb-’ from ‘bbb+’ of Oriental Insurance Company Limited (Oriental), India.

The outlook of the FSR has been revised to negative from stable, while the outlook of the Long-Term ICR remains negative.

The ratings reflect Oriental’s balance sheet strength, which AM Best categorised as very strong, marginal operating performance, neutral business profile and marginal enterprise risk management (ERM).

The rating downgrades follow a deterioration in AM Best’s view of Oriental’s operating performance and ERM fundamentals, according to a statement.

Oriental has recorded a sizeable underwriting loss of INR38 billion (US$549 million) in fiscal year 2019, equivalent to 32 per cent of its capital base in the prior year. (INR100 = RM5.87).

The marginal assessment on ERM reflects the company’s inability to control its underwriting performance, coupled with the negative impact on its balance sheet strength and earnings.

The negative outlooks reflect AM Best’s expectation that Oriental’s rating fundamentals may weaken further if the company is unable to stabilise its risk-adjusted capitalisation and operating performance over the near term.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. More information at www.ambest.com.

-- BERNAMA