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Indian Financial System

Notes 14. lending
15. financial institution

10.9 Further Reading

Book Michael K. Ong, Credit Ratings: Methodologies, Rationale and Default Risk, Risk
Books

Online links www.onicra.com
www.sebi.com
www.indianembassy.org

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Case Study Indian Insurers' Credit Ratings seen Stable

'Ownership change likely if foreign partners can't provide more capital'.
Mumbai, Sept. 24 The credit ratings of Indian insurance companies – both life and non-life
– are unlikely to be affected in the near future despite the global financial crisis affecting
the foreign stakeholders of these companies.
But if the foreign partners are unable to bring in additional capital in the long term due to
the global slowdown, it could mean a change of ownership for Indian insurance companies,
said analysts.

In the wake of the financial crisis, a number of companies in the banking and insurance
sector across the world have faced downgrades, either due to their exposure to Lehman
Brothers and AIG or to reflect heightened industry risk following the turmoil in the
global financial markets.
Foreign companies such as Allianz, Prudential Financial Inc, AXA, AEGON, Sun Life
Financial, Aviva, BNP Paribas, Fortis and ING have all reported some kind of exposure to
either Lehman Brothers or AIG or both.

So far, the ratings of AIG and its subsidiaries and Fortis' Asian subsidiary have been
downgraded.
All these companies are stake holders in Indian insurance companies and hold about 26
per cent stake each.
But, according to analysts, this is unlikely to affect the credit ratings of these insurance
companies at least in the short term.

Strong Parentage
"Most of these companies have strong parents and their ratings are unlikely to be revised
in the near term," said Mr. Subroto Ray, Head Corporate Sector Ratings, ICRA.

Contd...

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