LONDON, 3 December 2015
A.M. Best has affirmed the financial strength rating of B++ (Good) and the issuer credit rating of "bbb+" of Jordan Insurance Company Plc. (JIC) (Jordan). The outlook for both ratings remains stable.
The ratings reflect JIC's strong business position in Jordan and solid operating performance. Offsetting rating factors include JIC's gradually declining risk-adjusted capitalisation, the company's highly concentrated investment portfolio and the economic and financial risks associated with operating in Jordan.
JIC maintains a leading position within its domestic market with a portfolio well-diversified across the life and non-life business segments. The company achieved a 4% growth in its premium revenue to JOD 62.1 million (USD 88.0 million) in 2014. JIC's business profile also benefits from geographical diversification through its branches in Kuwait and the United Arab Emirates, which contribute approximately 15% to premium revenue.
JIC has demonstrated a track record of solid underwriting performance in recent years, borne by a prudent underwriting approach and high level of client retention. The company recorded a technical result of JOD 4.4 million (USD 6.2 million) in 2014, the highest since 2009, which translated into a strong combined ratio of 82% (2013: 90%), primarily driven by strong performance on its motor line of business. Technical earnings were adequately supported by strong dividend income in 2014, allowing the company to record a solid profit before tax of JOD 4.4 million (USD 6.2 million). Results for the first half of 2015 indicate that performance has remained stable, with the company reporting a net result of JOD 1.8 million (USD 2.6 million).
JIC's ratings have become increasingly pressured by its risk-adjusted capitalisation, which has trended downwards in recent years, and is deemed marginal for the current ratings. The reduction has primarily been driven by high dividend payments of up to 12% of paid-up capital. The company's investment portfolio remains heavily concentrated in equity and real estate assets, which are the primary drivers of its capital requirements. Prospective risk-adjusted capitalisation is expected to remain dependent on JIC's ability to de-risk its balance sheet, and generate sufficient internal capital to support future growth, which could be dampened by the high dividend policy of its shareholders.
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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