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The Export Credit Guarantee Corporation of India (ECGC), fully owned by the Indian government, has shown robust technical earnings during the fiscal years 2023 and 2024, according to a report by AM Best. The improvement in the company’s operating performance has been driven by better-than-expected claims experience and favorable claims reserve development, in addition to ECGC’s conservative approach to reserving, which has helped stabilize earnings despite ongoing geopolitical and economic challenges.
Positive Outlook from AM Best
AM Best has upgraded ECGC’s outlook to ‘Positive’ from ‘Stable,’ reaffirming the company’s Financial Strength Rating (FSR) at ‘B++’ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) at ‘bbb+’ (Good). In addition, ECGC’s India National Scale Rating (NSR) remains at ‘aaa.IN’ (Exceptional), with a stable outlook.
This improved outlook is largely due to a positive trend in ECGC’s underwriting performance, particularly in its export credit insurance provided to banks. The company’s prudent management of claims reserves and stable investment income also support its overall profitability.
Strength of the Balance Sheet
ECGC’s balance sheet is considered very strong, as indicated by its risk-adjusted capitalisation. The company is expected to maintain the highest capital adequacy level, as measured by AM Best’s Capital Adequacy Ratio (BCAR), in the medium term. ECGC benefits from financial flexibility due to capital contributions from the Indian government, and its investment portfolio is marked by low to moderate risk. However, exposure to severe stress scenarios remains a concern, though mitigated by the company’s strong capitalisation.
Business Profile and Risks
ECGC holds a neutral business profile as a monoline credit insurer primarily serving Indian exporters and banks. As a market leader in the Indian export credit insurance sector, ECGC covers approximately 40% of the total export credit disbursement by banks. However, its business is concentrated, with limited diversification and a high concentration of risk among a small group of exporters. Additionally, the company’s underwriting portfolio faces moderate to high reserving risk due to the long-term nature of credit insurance claims.
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