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FOR IMMEDIATE RELEASE
LONDON - MARCH 07, 2024 10:13 AM (EST)
AM Best has revised the outlook to stable from negative for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of B (Fair) and the Long-Term ICR of “bb+” (Fair) of Middle East Insurance Company Plc (MEICO) (Jordan). The outlook of the FSR is stable.
The Credit Ratings (ratings) reflect MEICO’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The revision of the Long-Term ICR outlook to stable from negative reflects the stabilisation in MEICO’s balance sheet strength credit fundamentals, which had been under pressure in recent years.
The company’s risk-adjusted capitalisation, which AM Best assesses as strong, as measured by Best’s Capital Adequacy Ratio (BCAR), is impacted by significant capital requirements emanating from concentration to a single equity and real estate holdings. The balance sheet strength assessment considers MEICO’s unleveraged balance sheet, adequate liquidity, strong reserving practices, and low underwriting leverage.
MEICO’s underwriting results have been adequate in recent years, as evidenced by a five-year (2018-2022) weighted average combined ratio of 99.6% (as calculated by AM Best). Technical performance in 2023, under the new IFRS 17 standard, is expected to have remained in line with recent underwriting results. Investment performance, albeit volatile, contributes positively to overall profitability, as evidenced by the five-year (2018-2022) weighted average net investment return (including gains) of 2.6%.
MEICO is a mid-tier player in Jordan, with gross written premium (GWP) of JOD 46.2 million (USD 65.2 million) in 2022. Growth was moderate in recent years, with a compounded annual growth rate of 1.8% over the period between 2018 and 2022, as a result of competitive pressures in Jordan’s insurance market. In 2022, MEICO’s GWP grew by 11.8%, and is expected to expand further by 6-7% in 2023, mainly as a result of the reallocation of mandatory motor third-party liability insurance business to incumbents following the exit of some players in the market during 2022. Prospectively, premium growth is expected to remain moderate.
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.