AM Best Affirms Credit Ratings of Jordan Insurance Company Plc.
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, which was at the strongest level as at year-end 2024, as measured by Best's Capital Adequacy Ratio (BCAR). The company's BCAR scores have improved in recent years as a result of measures taken by management to increase risk-adjusted capitalisation, including the suspension of dividend payments and the divesture of certain capital-intensive investments. Nonetheless, a partially offsetting rating factor is JIC's significant holdings of illiquid equity and real estate asset classes, which have been a source of volatility to the company's total equity, and have negatively impacted its regulatory solvency capital ratio. The ratings also consider JIC's moderately high reinsurance dependence for large property and commercial risks, although the associated risks are partially mitigated by a stable reinsurance panel of good credit quality.
JIC has a track record of adequate operating performance, evidenced by return-on-equity ratios of approximately 4% over the last five years (2020-2024). The company reported a net profit of JOD 2.3 million in 2024 (2023: JOD 1.8 million), primarily driven by the profitability of its life portfolio, while challenging market conditions in Jordan and the United Arab Emirates translated into a non-life net/net combined ratio of 100.8% (101.7% in 2023 - as calculated by AM Best). Overall operating results have been supported by modest investment income, which translated into an average net investment return of 2.2% over the past five years. However, volatility in fair value movements of investments recognised through other comprehensive income introduced volatility into JIC's total equity over the period.
JIC has an established position in Jordan's insurance market, where the company consistently ranks second based on gross written premiums; however, this market remains relatively small by international standards. JIC's insurance services revenue is well-diversified across a range of life and non-life business lines in Jordan. Due to the heavy use of reinsurance on property and other commercial lines, the company's net insurance services revenue is concentrated in motor and medical, although to a lesser extent than its domestic peers. The assessment considers the geographic diversification provided by branch offices in the UAE and, to a lesser extent, Kuwait, together with the multi-year bancassurance agreements in place for the distribution of life insurance products, giving JIC a competitive edge over most of its domestic peers.
While JIC demonstrates a sound framework for identifying and managing underwriting-related risks, AM Best considers that risk management capabilities are not commensurate with the company's risk profile in areas including investments and capital management. The company is expected to take further steps to reduce its exposure to these risks over the short to medium term.
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.
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