LONDON, Thursday, December 23rd 2010 [ME NewsWire]:
(BUSINESS WIRE)-- A.M. Best Europe – Rating Services Limited has upgraded the issuer credit rating to “bbb+” from “bbb” and affirmed the financial strength rating of B++ of Jordan Insurance Company Plc (JIC) (Jordan). The outlook for the FSR is stable and the outlook for the ICR has been revised to stable from positive.
The rating actions reflect JIC’s leading business position in Jordan, strong and stable technical profitability and strong risk-adjusted capitalisation. The company’s investment strategy remains an offsetting factor.
A.M. Best expects JIC to experience a moderate growth rate of between 5-7% in 2010 with gross written premiums reaching JOD 42.5 millions by year end as the impact of the financial crisis continues to affect the whole of the Jordanian market. While growth will accelerate in the following years it is likely to remain in single digit numbers. JIC remains the second largest insurance company in Jordan (measured by gross written premiums) with a well diversified product offering.
JIC’s focus on technical profitability has resulted in market leading combined ratios of below 75% over the last three years. The company’s robust underwriting performance will improve further in 2010 due to the lack of significant claims and the release of reserves for a large claim incurred in 2009. Claims ratios for all lines of business remain moderate while operating expenses are kept low mainly due to a lean operating structure and significant profit commission from the company’s reinsurers.
Despite an aggressive investment strategy (focusing on equities and real estate) and significant reinsurance cessions, the company’s risk-adjusted capitalisation remains strong. Counterparty risk arising from the reinsurance cessions is kept low, with the use of highly rated reinsurers, most notably Munich Re which is also a shareholder of the company. The highest risk to capitalisation arises from the company’s investments which, in periods of financial crisis may prove to be less liquid than anticipated.
The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilised include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; “Rating Members of Insurance Groups”; and “A.M. Best’s Ratings & the Treatment of Debt”. Methodologies can be found at www.ambest.com/ratings/methodology.
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.
A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best Company. Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
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A.M. Best Company
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Financial Analyst
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Vasilis Katsipis, +(44) 20 7626 6264
General Manager
vasilis.katsipis@ambest.com
Rachelle Morrow, +1-908-439-2200, ext. 5378
Senior Manager, Public Relations
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Assistant Vice President, Public Relations
james.peavy@ambest.com
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