Detailed Rationale

Crisil Ratings has reaffirmed its Corporate Credit Rating (CCR) on The New India Assurance Company Limited (New India Assurance) at ‘Crisil AAA/Stable’.

The rating is driven by the company’s leadership position in the Indian general insurance industry, its sound investment portfolio, healthy capitalisation and solvency position, and the strategic importance to and support derived from the parent, the Government of India (GoI). These strengths remain partially offset by the company’s modest underwriting performance.

Based on Gross Direct Premium in India during the nine months ended December 31, 2024, New India Assurance remained the largest general insurance company in the country, with a market share of 12.8%. For the same period, the company’s claims ratio remained flat at 97.4% as compared to 98.1% for the corresponding period of the previous fiscal year, driven by marginally lower losses across segments except in motor third party. However, the expense ratio including commissions paid, improved to 21.7% from 22.3%, resulting in a combined ratio of 119.08% for the first nine months of fiscal 2025 vis-à-vis 120.34% for the corresponding period of the previous fiscal.

The company’s underwriting performance remains modest, as reflected in the underwriting deficit of Rs 5,083 crore for the nine months ended December 31, 2024 as against Rs 5,225 crore for the same period of last fiscal. However, its impact on the overall profitability continues to be offset by a steady income from investment. Resultantly, the net profit for the first nine months of fiscal 2025 was Rs 641 crore vis-à-vis a profit of Rs 775 crore for the corresponding period of the previous fiscal.

Nonetheless, the financial risk profile of New India Assurance remains strong, supported by its healthy capitalisation and solvency ratio. On December 31, 2024, the company had a healthy net worth of Rs 21,516 crore and comfortable solvency ratio of 1.90 times. In addition, the company had a substantial balance of Rs 24,991 crore in its fair value change account.

The rating also factors in the strategic importance of New India Assurance to and expectation of strong support from GoI.

Analytical Approach

For arriving at the corporate credit rating, Crisil Ratings has assessed the standalone business, financial and management risk profile of New India Assurance and applied its notch-up criteria to indicate the company's strategic importance to and the support expected from GoI.

Key Rating Drivers & Detailed Description

Strengths:

Sustained leadership position in the Indian general insurance industry: Based on Gross Direct Premium (domestic) in the nine months ended December 31, 2024, the company held 12.8% market share thereby making it the largest general insurance company in the country.

 

With a gross direct Indian premium of Rs 31,095 crore for the first nine months of fiscal 2025, the company registered an year-on-year growth of 3.1% as against the industry’s growth of 7.8%. It is the only Indian general insurer with an international presence; with footprint in 25 countries - which contributed 10% to its annual gross written premium for the fiscal. New India Assurance will continue to benefit from its long, established track record and superior market reach. Its status as a GoI-owned entity will enable it to sustain its market position in the Indian general insurance sector.

 

Based on gross premiums written in the first nine months of fiscal 2025, 46% of the company’s premium portfolio comprised health insurance premiums, followed by motor premium (27%) and fire insurance (13%). This distribution in premium across segments is likely to remain stable in the near to medium term backed by continued focus on health and motor segments. For some of the products, particularly on the corporate side, the company is aiming to revise pricing upwards – which will also aid underwriting performance. Nonetheless, external factors like motor vehicle sales and revision in pricing tariff for motor third party insurance, will continue to have a bearing on the overall growth. Nonetheless, the company’s market position will remain backed by its leadership position in the segment.

 

Healthy capitalisation and comfortable solvency ratio: Capital position of New India Assurance has remained healthy, as reflected in its large networth of Rs 21,516 crore as on December 31, 2024. Networth adjusted for un-booked appreciation in equity investments (reflected in its fair value change account) was even stronger at Rs 46,506 crore on this date. The strength of capital position can also be evidenced in the company’s comfortable solvency ratio (available solvency margin/required solvency margin) of 1.90 times. The ratio has consistently remained well above the regulatory requirement of 1.5 times. The solvency ratio, after adjusting for un-booked appreciation in equity investments, is substantially higher at 4.3 times.

 

The capital position is expected to remain comfortable in the normal course of business, supported by healthy accretions and substantial balance in the fair value change account.

 

Sound investment portfolio quality: The quality of investments remains sound. As on December 31, 2024, close to 98.9% of the company’s debt investments were in securities rated 'AA' or higher and almost 51% had a residual maturity of more than three years. Gross non-performing assets stood at 0.72% on December 31, 2024. The investment profile is also supported by close to 40% of the book being parked in government securities (central and state). Market value of the investments as on December 31, 2024, was Rs 86,718 crore.

 

Strategic importance to and expectation of continued support from GoI: New India Assurance is strategically important to GoI because of its dominant market position (over 30 million policies) and because it is the flagship Indian general insurer in the international markets, with a desk at the prestigious Lloyd's syndicate in London. The importance of the general insurance sector, especially GoI-owned insurers such as New India Assurance, can be seen in the context of GoI's plan to materially enhance insurance penetration over the long term. General insurance companies, especially government-owned entities, are systemically important and will receive support from the government in the event of strain on their credit risk profiles.

 

Weakness:

Modest underwriting performance: New India Assurance's underwriting performance remains modest. For fiscal 2024, the company’s claims ratio was 97.4%, expense ratio was 23.5% resulting in an overall combined ratio of 120.9%.

 

For the first nine months of fiscal 2025, the company’s claims ratio remained flat at 97.4% as compared to 98.1% for the corresponding period of the previous fiscal year, driven by marginally lower losses across segments except in motor third party. For key segments like health (46% of gross direct premiums in 9M 2025) and motor (28%), claims ratios were 104.0% (106.5% for the corresponding period in fiscal 2024) and 105.1% (99.9% for the corresponding period in fiscal 2024), respectively.

 

However, the overall expense ratio including commission paid improved to 21.7% from 22.3%, resulting in a combined ratio of 119.1% for the first nine months of fiscal 2025 vis-à-vis 120.3% for the corresponding period of the previous fiscal. This corresponded to a marginal improvement in the underwriting deficit to Rs 5,083 crore for the first nine months of fiscal 2025 from Rs 5225 crore in the year-ago period. While the underwriting performance remains modest for now, the combined ratio should improve gradually over the long term, supported by the company’s efforts to improve performance in core verticals such as motor and health and to diversify into retail segments.

Liquidity: Superior

The company has adequate liquidity, with a large proportion of liquid investments. On December 31, 2024, government securities accounted for ~40% of its investment portfolio based on market value. Additionally, cash and bank balance of over Rs 13,989 crore and a substantial balance of Rs 24,991 crore in the fair value change account, further enhances the company's liquidity position.

Outlook: Stable

New India Assurance should continue to benefit from its leadership position in the Indian general insurance industry and maintain its market share, healthy capitalisation and sound quality of investment portfolio over the medium term. New India Assurance will also receive support from GoI, in the unlikely event of financial distress.

Rating sensitivity factors

Downward factors

• Substantial increase in underwriting losses, adversely impacting profitability or solvency
• Steep decline in the extent of ownership by GoI to below 51% or reduction in strategic importance to GoI

About the Company

New India Assurance is India’s largest non-life insurance company with the GoI holding 85.44%. New India was established in 1919 by Sir Dorabji Tata and nationalised in 1973. Post nationalisation, it became one of the four subsidiaries of the General Insurance Company of India (GIC). When GIC became a re-insurance company as per the IRDA Act 1999, its four primary insurance subsidiaries — New India Assurance, United India Insurance, Oriental Insurance and National Insurance — became independent operating entities.

 

New India Assurance is the only Indian general insurance company that has a strong presence in India and good reach overseas. In India, the company operates through 29 Regional Offices, 1 Regional Government Business Office, 3 Auto Hubs, 15 Corporate Brokers Offices, 20 Key Business Offices, 199 Large Business Offices, 721 Medium Business Offices, 606 Small Business Offices, 70 Auto Tie-up Operating Offices, 1 IFSC GIFT City Office, making it a total of 1668 Offices inclusive of Head Office. It is present in 25 countries through 19 branch offices, 6 agencies, 3 subsidiary companies, 1 representative office and 2 associates.

As on / for the period ended March 31		2024	2023
Gross written premium	Rs crore	41,996	38,791
Networth (reported)	Rs crore	21135	19,919
Profit after tax	Rs crore	1,129	1,055
Combined ratio	%	120.9	117.2
Solvency margin	Times	1.81	1.87

As on / for the period ended December 31		2024	2023
Gross written premium	Rs crore	32,186	31,425
Networth (reported)	Rs crore	21,516	20,754
Profit after tax	Rs crore	641	775
Combined ratio	%	119.1	120.3
Solvency margin	Times	1.90	1.72

Any other information: Not Applicable