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 (ERM).

JIC’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the very strong level, as measured by Best’s Capital Adequacy Ratio (BCAR). JIC’s BCAR scores have improved in recent years as a result of measures taken by management to strengthen the balance sheet, including the suspension of dividend payments and the divesture of certain capital-intensive investments. Nonetheless, AM Best views liquidity, as well as asset and liability management, as partially offsetting rating factors, as JIC maintains significant investment concentrations within the equity and real estate asset classes. The company’s prospective liquidity position will depend on its ability to continue derisking its investment portfolio. The ratings also consider JIC’s moderate dependence on reinsurance for large property and engineering risks, which is viewed as an offsetting factor; however, this is mitigated partially by a reinsurance panel of good credit quality.

JIC has a track record of adequate operating performance, despite challenging market conditions in the Jordanian and UAE markets. JIC reported a return-on-equity ratio of 4.3% in 2023, an improvement from the prior year, primarily driven by the profitability of its life portfolio and higher investment income. Prospective operating performance will depend on the company’s ability to maintain underwriting discipline.

JIC has an established position in Jordan’s insurance market, where it is ranked No.2 based on gross written premium (GWP). However, Jordan’s insurance market remains relatively small by international standards. The company’s GWP is well-diversified across a range of life and non-life business lines, although on a net basis, is concentrated in motor and medical, albeit to a lesser extent than its domestic market peers. JIC benefits from a degree of geographic diversification via its branch offices in the UAE and Kuwait.

JIC demonstrates good controls and adequate risk management in respect of its underwriting operations. Nevertheless, limitations in investment, liquidity and capital management have a negative impact on AM Best’s assessment of the company’s ERM.

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