OLDWICK, N.J.–(BUSINESS WIRE)–In this episode of AMBestTV, Myles Gould, director, analytics, and Yuan Tian, senior financial analyst, both of AM Best, said that competition, poor pricing discipline and investments challenge the India non-life market. Click on http://www.ambest.com/v.asp?v=india620 to view the entire program.
AM Best has a market segment outlook of negative on India’s non-life market. Gould addressed the key factors that are driving the negative outlook.
“Key factors underpinning the negative outlook include the competitive market conditions in core lines of business along with poor pricing discipline,” said Gould. “Furthermore, there is an unhealthy reliance on unrealized and realized gains from investment holdings, particularly emanating from typically high-risk investment strategies. In addition, a more recent dynamic is that of the global COVID-19 pandemic, which is expected to result in a level of volatility in top-line and bottom-line results of Indian non-life insurance.”
Tian highlighted the reasons for the imbalance in the non-life market operating results.
“The market has been quite a loss-making on the writing side,” said Tian. “So the insurance companies in this market have been relying on investment returns to generate overall positive operating earnings. The companies have been quite aggressive investing in high-risk asset classes such as equity, low-quality fixed income and real estate assets. Those asset classes have been generating quite good returns over the last years. However, during the pandemic, the stock market has fallen by over 20% in the first quarter. This has impacted the capital position and earnings of non-life insurers.”
To access the related market segment report, titled, “Market Segment Outlook: India Non-Life,” please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=297272.
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