The ratings reflect GIC Re’s strong risk-adjusted capitalization and business profile in its domestic market.

Favorable capital growth has lifted GIC Re’s capital position to INR 419 billion (USD 6.7 billion) at financial year-end 2015 from INR 261 billion (USD 5.8 billion) at financial year-end 2010. Capital growth has been well in excess of insurance risk, which has increased capital buffers. GIC Re continues to have a strong profile in India’s reinsurance market where it remains the dominant player.

Offsetting rating factors include the poor underwriting performance of GIC Re’s overseas business, which accounts for 42% of its gross premiums. Notwithstanding GIC Re’s strong risk-adjusted capitalization, changes in fair value reserves could result in significant volatility due to the company’s high level of equity investments. Regulatory changes could increase competition for GIC Re in its domestic market. However, amendments are still evolving, and the impact on GIC Re remains to be seen.

Positive rating momentum could result from a consistent improvement in GIC Re’s underwriting performance, especially in its overseas business.
Negative rating momentum could result from an unexpectedly large decline in risk-adjusted capitalization as a result of adverse fair value movements and a deteriorating trend in overall results.

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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