LONDON, 10 August 2015--A.M. Best has assigned a financial strength rating of B+ (Good) and an issuer credit rating of "bbb-" to Jordan International Insurance Company (JIIC) (Jordan). The outlook assigned to both ratings is stable.
The ratings reflect JIIC's robust risk-adjusted capitalisation and good enterprise risk-management. Offsetting rating factors are its limited business profile and its weak, but improving, level of underwriting
profitability.
JIIC maintains strong risk-adjusted capitalisation, benefitting from low underwriting leverage and a strong reinsurance panel to support the high outward reinsurance cessations on commercial risks. Capital requirements are largely driven by JIIC's investment profile, which is weighted toward equity and real estate assets. JIIC's capitalisation is expected to remain strong through good internal capital generation and by maintaining a sufficient buffer to support initiatives over the next few years.
Following a strategic decision to withdraw from its loss making motor business in 2011, the subsequent reduction in motor premiums resulted in JIIC's market share dropping from 3.9% in 2012 to 2% in 2014. This decision reflects the company's strategy to specialise in non-motor segments, in particular medical healthcare, in which JIIC can exert greater control over underwriting. This ensures the company's focus on profitability over top-line growth, which is expected to stabilise prospective earnings. Medical business contributed 61% and 95% of the company's gross and net written premiums in 2014, respectively.
JIIC has demonstrated improved underwriting results following the decision to withdraw from the motor insurance market. The company's combined ratio has improved to 96% in 2014 from 110% in 2012. Whilst underwriting performance remains marginal, the combined ratio is expected to improve as a result of cost efficiency measures being introduced in 2015. Over the medium term, A.M. Best expects JIIC to produce combined ratio below 95%.
JIIC has a good risk-management framework, with well-defined risk tolerances. The company has developed appropriate tools and processes to identify, measure and manage risks across its operations. Economic capital is managed to ensure that sufficient internal capital is generated to support the company's strategic plans.
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.
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