AM Best Downgrades Credit Ratings of Jordan Insurance Company Plc

LONDON--(BUSINESS WIRE)-- AM Best has downgraded the Financial Strength Rating (FSR) to B (Fair) from B+ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “bb+” from “bbb-” of Jordan Insurance Company Plc (JIC) (Jordan). The outlook of the Long-Term ICR has been revised to negative from stable, while the outlook of the FSR remains stable.

The Credit Rating (ratings) reflect JIC’s balance sheet strength, which AM Best categorises as strong, as well as its adequate operating performance, neutral business profile and marginal enterprise risk management.

The ratings downgrades reflect a revision in AM Best’s assessment of the company’s operating performance to adequate from strong. Although JIC’s underwriting performance is expected to have improved in 2018 to a robust level following two years of underperformance due to specific issues, the rating action is in response to the company’s marginal overall results over a number of years. The company’s medium term return on equity lags behind AM Best’s expectation of a strong operating performance and has been negatively impacted by non-underwriting items such as interest expense and poor investments results.

The negative outlook of the Long-Term ICR relates to AM Best’s concerns regarding JIC’s balance sheet strength assessment. In 2018, the company’s risk-adjusted capitalisation is expected to have deteriorated marginally, while its financial leverage materially increased and its liquidity reduced. The company is taking steps to divest from a number of its concentrated and illiquid investments, which is expected to reverse the negative trend experienced in risk-adjusted capitalisation, liquidity and leverage. The negative outlook of the Long-Term ICR also reflects the risk that in the short term the company is unable to divest successfully from these investments and retain the profit within the company.

JIC has a good competitive position in its domestic market, ranked second in the market based on gross written premiums in 2017. However, Jordan’s insurance market is relatively small by international standards with limited growth opportunities. 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, AM Best considers there to be deficiencies in the management of investment, liquidity and capital management risks.

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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.

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Luca Patron

Financial Analyst

+44 20 7397 0304

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Tim Prince

Director, Analytics

+44 20 7397 0320

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Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

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Jim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644

[email protected]

Source: AM Best