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FOR IMMEDIATE RELEASE
LONDON - AUGUST 25, 2016 11:06 AM (EDT)
A.M. Best has affirmed the financial strength rating of B+ (Good) and the issuer credit rating of “bbb-” of Jordan International Insurance Company (JIIC) (Jordan). The outlook for each rating remains stable.
The ratings reflect JIIC’s strong risk-adjusted capitalisation, improving technical performance and robust enterprise risk management (ERM). Offsetting rating factors include the company’s limited business profile and the high levels of economic, political and financial system risks associated with operating in Jordan.
JIIC’s risk-adjusted capitalisation remained at a strong level during 2015. Whilst JIIC has a concentrated investment portfolio, with equity and real estate holdings driving overall capital requirements, the company maintains an adequate buffer in capital adequacy to absorb the risks associated with these investment holdings. Over the next three years (2016-2018), A.M. Best expects the company’s underwriting operations to grow by between 15% and 30% per annum; however, good internal capital generation is expected to support the maintenance of its strong capital position.
Following JIIC’s decision to withdraw from the loss-making Jordanian motor segment in 2011, the company’s technical performance has materially improved. For 2015, the company reported an improved combined ratio of 92.2%, compared with a five-year average of 103.3% (2011-2015). JIIC’s decision to focus on non-motor lines, and in particular medical business in Jordan, reflects management’s view that they can exert greater control over underwriting and the claims management process. Over the next three years, A.M. Best expects JIIC to continue reporting combined ratios of below 95%.
JIIC’s business profile remains limited with a gross premium base of JOD 13.2 million (USD 18.7 million) in 2015, representing a market share of 2.3%. JIIC’s premium base fell from JOD 18.4 million (USD 26.1 million) in 2011 to JOD 10.7 million (USD 15.2 million) in 2013, following the decision to exit the Jordanian motor market. The company’s operations have since become focused on medical business, with this product line representing 56% and 92% of the company’s gross and net written premiums in 2015, respectively. Premium growth is expected to be driven by the continued expansion of medical business; however, the company’s profile is expected to remain small over the medium term.
JIIC has a robust approach to ERM, with strong identification and quantification of key risks, as well as adequate controls to mitigate and reduce the potential impact on earnings and risk-adjusted capitalisation. The company manages economic capital to ensure that sufficient internal capital is generated to support the company’s strategic growth plans.
This press release relates to rating(s) that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page.
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