CARE undertakes rating exercise based on information provided by the company, in-house
database and data from other sources that CARE considers reliable.
+ Debt Ratings
+ Bank Loan
+ Issuer Ratings +
Corporate Governance Rating
+ Recovery Rating
Financial Sector Ratings
CARE’s ratings factor in the array of risks that have an effect on the Financial
Sector company viz business risks, legal risk, financial risks and management risks.
+ Credit Quality Rating
+ Capital Protection Oriented Scheme Ratings
+ Insurance + NBFCs
+ Housing Finance
Public Finance Ratings
CARE has comprehensive framework for the assessment of the credit quality of states
and local bodies.
+ Urban Local Bodies
CARE’s Project Finance Ratingis an independent opinion on the risks associated with
the project on a standalone basis and after considering the sponsor’s strength.
+ Project Finance
Infrastructure Sector Ratings
CARE’s Infrastructure Sector Rating encompasses the ratings assigned to debt programmes
of issuers in the power, roads, telecommunications and other such infrastructure-related
CARE’s SME Vertical
Value-added services for SMEs
+ Wide product offerings
+ Database of more than 6,000 SME entities
+ Quarterly publications for analytical inputs
+ Daily publication on news in SME sector
+ Operating from ten branches across India
+ MoU with leading banks for interest & rating fee concession
+ A team of qualified analyst
+ Click here to view Services in MSME Segment
Indian SMEs face growth constraints due to lack of adequate& timely finance and difficulty to establish credible relations with its stakeholders.
CARE’s SME vertical with its sound data base and analytical abilities offers the various products in this segment to bridge this gap.
+ NSIC-CARE Performance & Credit
Rating for MSEs + SME Ratings
+ SME Fundamental Grading
+ Bank Loan Ratings
+ Due Diligence Service
+ Channel Partner
EQUIGRADE is a flagship product under equity research and grading services offered
+ Read More
Real Estate Star Rating
CARE undertakes the Real Estate Star Rating exercise by implementing its plethora
of analytical expertise.
CARE EDU GRADE is a grading product for Educational Institutes.
CARE’s IPO grading is a service aimed at facilitating the assessment of equity issues
offered to public.
ITI Grading is a grading product for Industrial Training Institutes.
+ Read More
CARE's MFI grading is a one-time assessment of a Micro Finance Institution's (MFI)
operational and financial capability…
CARE’s Rating of REIT fund is an opinion on the REIT’s investment quality, based on the fundamental assessment of the REIT.…
CARE has been empanelled by MNRE for carrying out the Accreditation/Grading exercise
for Renewable Energy Service Companies (RESCOs)…
The ESCOs specializes in energy audits and implement energy efficiency practices
in a particular organization…
+ Shipyard Grading
+ Construction Grading
+ Maritime Grading
Rating Symbols & Definition
+ Bank Loan Ratings
+ Corporate Governance Rating
+ Construction Grading
+ Corporate Governance Rating
Rating/Statistics – Regulatory Disclosure
+ Credit Rating History and Default
+ Structured Finance Product
+ Outstanding Rating
+ Brief Rationale
+ Rating Committee
+ Complexity Level of Rated Instruments
+ FAQs on
+ Fee Structure
The Economics Department is known for its regular and almost real-time domestic
and global economy-related updates, opinions as well as analytical Studies and Surveys.
Analyses of developments in areas such as GDP, industrial growth, inflation, agricultural
growth, trade etc.
The reports in this section assess the impact of various policy measures by different
countries on India’s economy and so on.
Surveys that capture expectations of the key players in the industry; from various
fields like banking, automobile, entertainment, etc., on various economic developments.
In-depth analytical Studies to ascertain trends in various facets of the economy.
Debt Market Update
A free monthly bulletin about the happenings in the debt market.
+ Audited Financial Results
+ Unaudited Financial Results
+ Annual Reports
+ BSE Stock Watch + NSE Market Tracker
+ Registrar and Share Transfer
The rating process takes about two to three weeks, depending on the complexity of
the assignment and the flow of information from the client. Ratings are assigned
by the Rating Committee.
CARE undertakes a rating exercise based on information provided by the company,
in-house databases and data from other sources that CARE considers reliable. CARE
does not undertake unsolicited ratings.
Rating fees are computed separately on each instrument issued. Issuers are liable
to pay rating fees, regardless of whether they accept CARE's rating or not. Full
rating fee is to be paid up front.
Why CARE Ratings? Why is credit rating necessary at all? Why do rating agencies
use symbols like AAA, AA, rather than give marks or descriptive credit opinion?
+ View More
CARE’s Claims Paying Ability (CPA) rating is an opinion on an insurance company’s financial strength and measures its ability to honour policy claims as per contractual commitments. The opinion is not specific to any particular insurance policy or contract. CARE’s CPA rating does not apply to non-policy obligations of the insurer, such as debt, nor does it address the suitability of terms of any individual policy or contracts. Additionally, the rating does not take into account deductibles, surrender or cancellation penalties, timeliness of payment nor the likelihood of the use of a defense like fraud to deny claims. The rating does not take into account any limitation that the insurers might face in settling its foreign claims due to exchange control/sovereign restrictions that might be placed on foreign currency payments by the Government of India.
CARE’s CPA rating is not a recommendation to buy, hold or sell/terminate any security/insurance policy.
Benefits of CPA rating
The CPA rating is primarily useful to:
CARE’s CPA rating analysis begins by a review of the economy and the industry in which the insurance company operates. The nature of insurance regulation and the competitive position of the company are also examined. CARE then applies the “RAMELS” framework to assess 2the financial strength of the subject insurance company. No one factor is considered in isolation but all factors are viewed in conjunction before assigning a rating.
A detailed methodology based on the RAMELS framework is given below:
Analysis of risks underwritten constitutes the key element in a CPA rating assessment and plays a vital role in the final outcome of the rating assigned. The efficacy of a firm’s underwriting strength is brought out by its historical claims experience, degree of diversification in risks underwritten and the relative growth in business volumes. CARE also evaluates the pricing of insurance products, mix of tariffed and non-tariffed businesses, proportion of long tail business as well as exposure to lumpy risks such as catastrophe covers. Each business segment of the insurer is analysed in depth with an emphasis on understanding its unique competitive characteristics that would drive future earnings potential or cause deterioration in financial strength.
Following factors are considered while analyzing the business segments of the insurer:
A quantitative and qualitative assessment of the above factors is carried out by analyzing the trends in premium income, reinsurance ceded, claims experience and expenses incurred on 3reinsurance business over a five year time span. Apart from the above, CARE also assesses the current as well as potential underwriting capacity by analyzing the firm’s operating leverage.
CARE also examines the insurer’s reinsurance programme, terms of reinsurance, financial strength of reinsurers and the company’s processes employed to monitor, collect and settle outstanding reinsurance receivables.
Claims Paying Ability of an insurer could be hampered by future losses on its investment portfolio. In respect of insurance entities, asset quality assumes a greater dimension as it influences not only the level of income but also has a direct bearing on the insurer’s ability to provide instant liquidity.
Insurance entities are susceptible to credit as well as market risk on their asset portfolio similar to banks. In this regard, CARE analyses the quality and diversification of assets across various classes. As most of the asset deployment decisions are largely guided by certain regulatory constraints, CARE reviews the insurer’s level of adherence to regulatory norms and assesses its performance under the specified constraints. CARE also measures the degree of success of the asset deployment strategy vis-à-vis the slated goals of maintaining a fair degree of liquidity, yield optimization and capital protection.
In this context, CARE broadly examines factors such as:
Management quality is a very important qualitative aspect, which can make a substantial difference to a company’s performance. Insurers must be able to demonstrate that they have growing, profitable business with staying power.4In this context, CARE scrutinizes the management’s goals, mission, philosophy etc. and reviews the corporate strategy laid down to achieve the stated goals. CARE analyses the operational objectives assigned to individual teams or divisions to understand their relevance to the overall corporate strategy which has a direct bearing on key operational parameters. This involves a process wherein CARE’s team undertakes discussions with key executives to understand the insurance companies’ perspectives on the strategies and plans designed to counter environmental challenges from all fronts. Thus, experience and depth of management to tide over periods of crisis is recognised as a favourable attribute.
CARE also examines the financial strength and track record of the promoters, the degree of group support enjoyed particularly at times of stress, nature of business plans and targets, experience of key executives manning important positions and the degree of technology orientation. Strong parentage and group support is viewed favourably by CARE and is examined with respect to past proven support and assurances of future support.
Profitable operations are necessary for insurance companies to operate as a going concern. CARE’s measurement of earnings focuses on an insurer’s ability to efficiently translate its strategies and competitive strengths into growth opportunities and sustainable profit margins. CARE analyses the profitability of the underwriting and investment functions separately.
Underwriting profitability is impacted by the level of premium income, agency commission, staff costs and claims experience. Following ratios are analyzed to gauge the underwriting performance of an insurer:
Performance of Investment
Investment income is largely a function of the investment strategy followed by the company. The behavior of the securities market and interest rate movements also influence the returns on the investment portfolio. CARE examines the following to assess the performance of investment operations in terms of investment yield. Market risk and its probable impact on earnings is also examined.
Overall profitability tests
CARE analyses a few ratios to assess the overall profitability of the insurer. These ratios are analysed over the past few years and compared with the industry benchmarks.
Good liquidity helps an insurance company to meet policyholder’s obligations promptly. An insurer’s liquidity depends upon the degree to which it can satisfy its financial obligations by holding cash and investments that are sound, diversified and liquid or through operating cash flows. A high degree of liquidity enables an insurer to meet the unexpected cash requirements without untimely sale of investments, which may result in substantial realized losses due to temporary market conditions and/or tax consequences.
Some of the ratios examined by CARE for assessing the liquidity of an insurer include:
While analyzing an insurer’s liquidity, CARE would critically examine the Asset Liability Maturity (ALM) profile of the insurer. CARE would also examine the impact of stress tests on the ALM to understand the shock absorbing capacity in the event of an unforeseen loss of confidence, sudden catastrophe losses or wide fluctuations in the security markets.
Adequacy of solvency margin forms the basic foundation for meeting policyholder obligations. All insurance companies are required to comply with solvency margin requirements of the regulator. CARE further analyses the impact of changes in key variables on solvency margin to ascertain the strength of the insurer.
Apart from the above, CARE also assesses the current as well as potential underwriting capacity through an analysis of a firm’s Operating Leverage.
CARE would study the reserving policy of the insurer and would examine the claims experience vis-a- vis the reserves created. The shortfall in reserves, if any, would then be compared with the insurer’s net worth.
Apart from relying on regulatory guidance on prescribed solvency levels, CARE would assess the capital adequacy of the insurer. CARE believes that capital adequacy addresses the impact of all dimensions of risk in the long term and therefore helps in arriving at a realistic level of risk.
The rating process takes about two to three weeks, depending on the complexity of the assignment and the flow of information from the client. Ratings are assigned by the Rating Committee.
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