Kolkata, April 7
ICRA has downgraded the iAAA rating assigned to National Insurance Co to iAA+, indicating high claim paying ability.
The rating agency has referred to a deterioration in underwriting profitability in 2003-04, growing competitive pressures and significant audit qualifications that indicate "systemic inadequacies within the company".
The rating downgrades reflect the sharp decline in the company's profitability, ICRA has stated while citing the qualifications made by the auditors with regard to the valuation of the company's liabilities towards policyholders.
"With the operating environment getting increasingly competitive, the profitability of the company could come under further pressure unless it takes measures to improve its underwriting practices, prune costs and improve claim management and service standards," a press release said. The credit strengths, according to ICRA, include access to a strong investment portfolio characterised by low levels of credit risk and high levels of liquidity, appreciation in the value of the equity portfolio and a national presence.
Incidentally, the company's equity portfolio has seen considerable appreciation in 2003-04. ICRA believes it would need to increasingly rely on trading activity for improving its profitability.