ECGC’s risk-adjusted capitalistation at strongest level in medium-term

As a monoline credit insurer, it insures about 40% of total export credit by banks.

India-based ECGC has shown improvement in its operating performance, particularly in its export credit insurance to banks segment, where the company has shown an upward trend in underwriting performance, according to AM Best. 

ECGC posted strong technical earnings in fiscal years 2023 and 2024, bolstered by favourable prior-period claims reserve developments. 

These developments were due to better-than-expected claims experience and a conservative reserving approach, despite challenges posed by geopolitical risks and economic uncertainty in previous years. 

Additionally, ECGC's profitability continues to be supported by favourable investment income.

The company’s balance sheet strength is assessed as very strong, with its risk-adjusted capitalisation expected to remain at the strongest level in the medium term, as measured by Best’s Capital Adequacy Ratio (BCAR). 

ECGC benefits from financial flexibility, supported by capital contributions from the Indian government. The company's investment portfolio carries low to moderate risk, though ECGC’s balance sheet faces some exposure to severe stress scenarios. However, its strong capital position mitigates this risk.

ECGC’s business profile remains neutral. As a monoline credit insurer, it holds a dominant position in India’s export credit insurance market, insuring about 40% of the total export credit disbursed by banks. 

However, its book of business is concentrated, with limited diversification and exposure to a small group of exporters. The company also faces moderate to high reserving risk due to the long-tail nature of credit insurance claims. 

The positive outlook signals the potential for further rating upgrades if ECGC continues to strengthen its operating performance and maintain its strong balance sheet.