The ratings reflect GIC Re's solid risk-adjusted capitalization, consistently favorable investment results and its strong presence in the Indian and overseas reinsurance markets.
GIC Re's capital and surplus increased by approximately 10% for fiscal year 2012-13, and the company continued to maintain low underwriting leverage and sound liquidity. GIC Reís risk-adjusted capitalization level remains strong and is supportive of its current rating level.
As the sole domestic reinsurer in
Offsetting these positive rating factors are GIC Re's high exposure to equity market volatility and increasing catastrophe exposure. The market value of GIC Re's equity investments was nearly half of its total invested assets. Volatility in the Indian equity market may have a direct impact on GIC Re's capitalization level through the fair value change account.
Global natural catastrophes in 2011 had a material impact on GIC Re's underwriting result. Although the Uttarakhand Floods in
Future upward rating actions could occur if GIC Re demonstrates the ability to achieve a consistently favorable underwriting performance and strengthen its investment and catastrophe risk management capability. Conversely, negative rating actions could occur if the company's risk-adjusted capitalization declines materially as a result of its unsatisfactory operating performance, or if there is a decline in its fair value change account.
The methodology used in determining these interactive ratings is Bestís Credit Rating Methodology, which provides a comprehensive explanation of A.M. Bestís rating process and contains the different rating criteria employed in the rating process. Bestís Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
This rating announcement has been issued by
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