ICRA has, however, said that the rating assigned by it is not specific to any particular insurance policy or contract as the standing of a particular obligation would depend on an assessment of its relative standing under the laws governing the obligation and the insurance company.

In recent years, the insurance industry has suffered underwriting losses in the motor insurance segment, the losses principally resulting from a high level of third party claims. NIAL has been able to control claims costs through adoption of underwriting safeguards. ICRA believes that the investment portfolio of the company, which largely comprises government securities and equity investments in blue chip companies, has a conservative risk profileand strengthens the claims paying ability.

The Indian general insurance companies have a conservative reinsurance philosophy and ICRA believes that NIAL through its reinsurance agreements with highly rated insurers is well protected from single large risks as well as catastrophic event losses. ICRA recognises the fact that the level of coverage of loss and premium reserves and the level of operating cash flows, key determinants of the claims paying ability of NIAL, compare with international standards.

The implementation of the recommendations of the Malhotra Committee is likely to usher in fundamental and structural changes in the general insurance industry. While this could make the market more competitive, ICRA believes that NIAL would be well protected by virtue of its expertise, financial flexibility and large distribution network.

Duff & Phelps Credit Rating India Pvt Ltd (DCR) has assigned a triple-A rating to the Rs 150 crore long-term debt programme of Mahindra & Mahindra which indicates thehighest credit quality and negligible risk factors. In order to maintain its leadership position, M&M has been constantly upgrading its existing products and has also embarked on an extensive modernisation and business process re-engineering programme designed to increase productivity and product quality.

DCR has also assigned an A+ rating to the fixed deposit (FD) programme of Summit Usha Martin Finance Ltd which indicates that the protection factors are adequate. However, the risk factors are more variable and greater in periods of economic stress.