LONDON--(BUSINESS WIRE)--AM Best has revised the outlooks to stable from positive and affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb+” of Jordan French Insurance Company Limited (JOFICO) (Jordan).
The ratings reflect JOFICO’s balance sheet strength, which AM Best categorises as strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management (ERM).
The revision of the outlooks to stable from positive reflects the persistently high level of receivables on JOFICO’s balance sheet, which generate liquidity strains for the company, and have the potential to impact its risk-adjusted capitalisation and operating performance in case of impairment.
JOFICO’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Offsetting factors include the company’s significant dependence on reinsurance, partially mitigated by a reinsurance panel of good credit quality. The assessment also factors in JOFICO’s marginal liquidity position, and small capital base, which heightens the sensitivity of its solvency position to potential shocks.
JOFICO has a track record of adequate operating performance, demonstrated by a five-year (2014-2018) weighted average combined ratio of 93.6%. Increasing pressures in Jordan’s motor market have led to a steady increase in the loss ratios over the past two years, reaching 72% in 2018 (as calculated by AM Best). Nonetheless, AM Best expects the company to maintain a double-digit return-on-equity ratio over the medium term, supported by solid technical profitability.
JOFICO has a limited business profile as a mid-tier insurer in Jordan, ranking eighth in the local insurance market based on 2018 gross written premiums. Although the company’s competitive position benefits from a number of long-term client relationships, the insurance market in Jordan is relatively small by international standards with limited growth opportunities.
JOFICO’s ERM framework is developing, with control and oversight of key risks conducted on a silo basis, and typically reactive in nature. Despite this, JOFICO’s risk management capabilities typically are aligned with the profile of its key risks.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.