LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of B+ (Good) and issuer credit rating of "bbb-" of ARABIA Insurance Company - Jordan (AIC-J) (Jordan). The outlook for both ratings remains stable.
The ratings reflect AIC-J’s good level of risk-adjusted capitalisation and stable financial performance. Offsetting factors include the company's modest business profile and the high levels of economic and financial system risk associated with operating in Jordan. AIC-J’s ratings receive enhancement due to the financial strength and support of its parent company, ARABIA Insurance Company s.a.l. (AIC).
AIC has a 51% shareholding in AIC-J, with support provided through shared corporate governance and risk management, group reinsurance purchasing and technical expertise.
AIC-J’s risk-adjusted capitalisation is expected to be maintained at a good level over the medium term. The company’s capital position benefits from full earnings retention, which should support its growing franchise.
AIC-J produced modest technical profits in 2013, with its combined ratio remaining below 100%. Both motor and medical business lines, which together account for nearly three quarters of gross written premiums, were loss-making in 2013, with underwriting profits continuing to be driven by the company’s marine, property and life business segments. AIC-J remains a fairly small player in the fragmented and competitive Jordanian market. Although the company is expected to grow over the medium term, its market position is not likely to change dramatically.
Positive rating movement could arise from a sustained improvement in underwriting performance, particularly for motor and medical business lines. A material deterioration in risk-adjusted capitalisation or removal of group support could result in a negative rating action.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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