A.M. Best Downgrades Credit Ratings of Jordan Insurance Company Plc.
The Credit Rating (rating) downgrades reflect deterioration of JIC’s balance sheet strength fundamentals. Risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), has declined over recent years despite management actions aimed at bolstering capital adequacy. Over the past five years, onerous dividend payments and underwriting growth, as well as fair value losses from the company’s concentrated and high risk investment portfolio, have negatively impacted its level of risk-adjusted capitalisation. In addition, JIC’s liquidity position deteriorated notably in 2017, with net operational cash outflows eroding the company’s cash resources, requiring it to utilise its bank overdraft facilities.
Underpinning JIC’s ratings are its balance sheet strength, which
The company’s balance sheet strength is expected to be managed to a strong level over the medium term. Management’s intention to divest certain capital intensive investments may lead to an improvement of risk-adjusted capitalisation if executed; however, the long-term benefits will be dependent on JIC’s ability to retain the proceeds within the company. Offsetting balance sheet factors include the company’s limited liquidity and asset liability management, weak regulatory solvency margin and moderate dependence on reinsurance.
JIC’s operating performance is viewed as strong, although somewhat volatile. The company’s underwriting performance has been excellent historically, with non-life combined ratios that have outstripped many of its local competitors. However, in 2016 and the first nine months of 2017, competitive market conditions across JIC’s non-life operations and reserve strengthening requirements in the
The company has a good competitive position within
JIC’s risk management framework is developing, and its risk management capability is viewed to be marginal relative to the size and complexity of its operations. The company has solid controls and adequate capability for key underwriting risks; however,
This press release relates to Credit Ratings 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. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and
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