AM Best Affirms Credit Ratings of Jordan Insurance Company Plc.

LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb+” (Fair) of Jordan Insurance Company Plc. (JIC) (Jordan). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect JIC’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and marginal enterprise risk management.

JIC’s balance sheet strength is underpinned by its risk-adjusted capitalisation that was at the very strong level at the end of 2021, as measured by Best’s Capital Adequacy Ratio (BCAR). JIC’s BCAR scores have improved since year-end 2018 as a result of measures taken by management to strengthen the balance sheet, including the suspension of dividend payments and the divestiture of some capital-intensive investments. AM Best views liquidity, as well as asset and liability management as partially offsetting rating factors, as the company maintains significant investment concentrations within equity and real estate asset classes. The company’s prospective liquidity position will depend on its ability to continue de-risking its investment portfolio and reinvesting in higher-quality liquid assets. The ratings also consider JIC’s moderate financial leverage, driven by overdrafts and loans contracted to fund the company’s regulatory capital requirements for its branch in the United Arab Emirates (UAE).

JIC has a track record of adequate operating performance, demonstrated by a five-year weighted average (2017-2021) return on equity of 2.6%. The company reported sound underwriting profitability in 2021, which translated into a combined ratio of 96.2%, as calculated by AM Best. This compares with 92.4% reported in 2020, when technical results were affected positively by a reduction in claims for the company’s motor and medical business resulting from the restrictions imposed by the government in response to the COVID-19 pandemic. AM Best expects JIC’s underwriting performance to remain positive in the coming years, due to increased underwriting discipline, and supportive of an adequate assessment.

JIC has a good competitive position within Jordan, where it is ranked No. 2 based on 2020 gross written premium (GWP). However, Jordan’s insurance market remains relatively small by international standards. The company benefits from some geographic diversification, with approximately 15% of its GWP emanating from the UAE.

JIC has demonstrated good controls and adequate risk management in respect of its underwriting operations. However, deficiencies in the management of investment, liquidity and capital risks have a negative impact on AM Best’s assessment of JIC’s ERM.

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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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