LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb+” of Arab Orient Insurance Company (gig Jordan) (Jordan). The outlook for both ratings remains stable.
The ratings reflect gig Jordan’s leading position in its domestic insurance market, robust profitability and sound risk-adjusted capitalisation. Offsetting rating factors are the economic and financial risks associated with operating in Jordan. gig Jordan’s rating benefits from the financial strength of its parent company, Gulf Insurance Group K.S.C.P. and its strategic importance to the group.
In 2014, gig Jordan achieved a 10% growth in gross written premiums to JOD 99 million (USD 140 million), which was notably ahead of the overall market growth rate of approximately 7%. gig Jordan has consolidated its market-leading position, as measured by gross written premiums, with a market share of approximately 18%. gig Jordan’s portfolio continues to be heavily concentrated toward medical and motor risks, which is a market characteristic in Jordan; together these lines accounted for 79% and 93% of the company’s gross and net written premiums in 2014, respectively.
gig Jordan has demonstrated strong underwriting profitability in recent years despite intense competition from domestic market participants. The company has consistently generated combined ratios below 90%. Solid underwriting performance is supported by a conservative investment strategy that produces a stable return, yielding approximately 3.9% in 2014. gig Jordan generated overall earnings of JD 5 million in 2014 (USD 7 million), with investment income contributing JD 2 million (USD 2.5 million).
gig Jordan maintains sound risk-adjusted capitalisation benefitting from a low level of premium retention, a good quality reinsurance panel and a conservative investment strategy. On a stressed basis, after consideration of gig Jordan’s exposure to catastrophic perils, the company’s level of capitalisation is at a marginal level, but remains supportive of the current ratings.
Positive rating movement may arise from the company continuing to defend it market position, whilst maintain a good level of operating performance and strengthened risk-adjusted capitalisation. Negative rating pressure may arise from a material reduction in risk-adjusted capitalisation. This may stem from aggressive growth, or a weakening of capital adequacy on a catastrophe stressed basis. A change in the level of parental support may also positively or negatively affect the ratings.
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.
Key insurance criteria reports utilised:
- Understanding Universal BCAR
- Evaluating Country Risk
- Risk Management and the Rating Process for Insurance Companies
- Catastrophe Analysis in A.M. Best Ratings
- Rating Members of Insurance Groups
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