AM Best Affirms Credit Ratings of ECGC Ltd.

SINGAPORE--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of B++ (Good), the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb+” (Good), and the India National Scale Rating (NSR) of aaa.IN (Exceptional) of ECGC Ltd. (ECGC) (India). The outlook of the FSR and the Long-Term ICR is positive, while the outlook of the NSR is stable.

The Credit Ratings (ratings) reflect ECGC’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. In addition, the ratings factor in a neutral impact from the company’s ownership by the government of India.

The positive outlook of the FSR and the Long-Term ICR reflect an improving trend in ECGC’s operating performance. The company recorded strong technical earnings over recent years, supported by underwriting performance improvement in key business segments, as well as favourable prior period claims reserve development, although underwriting performance exhibited increased volatility during the COVID pandemic years due to heightened geopolitical risks and economic uncertainty. Favourable investment income also has consistently supported overall profitability.

ECGC’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which is expected to remain at the strongest level over the medium term, as measured by Best’s Capital Adequacy Ratio (BCAR).

ECGC benefits from good financial flexibility, supported by capital contributions from India’s government. In addition, the company has a low- to- moderate risk investment portfolio. An offsetting balance sheet strength factor includes the company’s net exposure to severe stress scenarios, although the risk is mitigated in part by the company’s robust capitalisation level.

AM Best assesses ECGC’s business profile as neutral. The company is a monoline credit insurer providing export credit insurance to banks and Indian exporters. As a market leader in the export credit insurance market in India, ECGC insures a significant portion of the total export credit disbursement by banks. However, the company’s book of business exhibits limited product line diversification and high concentration of risk exposure to a small group of exporters. In addition, its underwriting portfolio is exposed to moderate- to- high reserving risk given the long-tail nature of credit insurance claims.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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