A.M. Best Affirms Ratings for Middle East Insurance Company

<p><location value="LU/gb.eng.london" idsrc="xmltag.org">LONDON</location>--(BUSINESS WIRE)-- <b>A.M. Best <location value="LR/eur" idsrc="xmltag.org">Europe</location> – <org>Rating Services Limited</org></b> has affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb” of <b>Middle East Insurance Company </b>(MEICO) (<location value="LC/jo" idsrc="xmltag.org">Jordan</location>). The outlook for both ratings remains stable. </p><p> The ratings of <org value="ACORN:288782606" idsrc="xmltag.org">MEICO</org> continue to reflect its sound domestic franchise, its diverse business profile, good technical profitability, strong risk-adjusted capitalisation and adequate risk management framework. However, the rating continues to reflect A.M. Best’s significant concerns regarding the company’s investment strategy. </p><p><org value="ACORN:288782606" idsrc="xmltag.org">MEICO</org> enjoys a sound domestic franchise in <location value="LC/jo" idsrc="xmltag.org">Jordan</location> where it ranks as the fourth largest insurer by gross written premiums, ranking as the largest in marine and the second largest in property. Whilst the company actively discourages motor third party liability business, which accounts for around 45% of the market, it has successfully protected its overall market share of 6.5% in 2010 and continues to maintain a diversified portfolio of business. </p><p><org value="ACORN:288782606" idsrc="xmltag.org">MEICO</org> has a long track record of generating profits driven through good technical performances on a year by year basis in both its life and non-life businesses. After a slight deterioration in 2009, the company restored its combined ratio in 2010 to 88%; a level that should remain achievable into 2011. </p><p> In A.M. Best’s opinion, MEICO’s prospective risk-adjusted capitalisation remains strong despite having deteriorated post-financial crisis as a result of the depressed capital markets. MEICO’s high risk investment strategy continues to be the main source of capital consumption and volatility in investment returns. Whilst the company maintains sufficient capital to absorb significant market movements, A.M. Best remains concerned given that more than 90% of the portfolio is invested in listed and private equity, or real estate (predominantly land). However, A.M. Best notes that there is significant hidden value in the company’s real estate portfolio. </p><p> Whilst MEICO’s risk management framework remains unsophisticated in line with its domestic peers, in A.M. Best’s opinion it is adequate given the company’s business profile. </p><p> The principal methodology used in determining these ratings is <a href="http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.ambest.com%2Fratings%2Fmethodology%2Fbcrm.pdf&esheet=6859778&lan=en-US&anchor=Best%27s+Credit+Rating+Methodology+--+Global+Life+and+Non-Life+Insurance+Edition&index=1&md5=c8b13e2744a2b267be90c5a03f332ff8">Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition</a><span class="bwuline">,</span> which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilised include: “Understanding Universal BCAR”; “Understanding BCAR for Property/Casualty Insurers”; “Natural Catastrophe Stress Test Methodology”; “Assessing Country Risk”; and “Risk Management and the Rating Process for Insurance Companies”. Methodologies can be found at <a href="http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.ambest.com%2Fratings%2Fmethodology&esheet=6859778&lan=en-US&anchor=www.ambest.com%2Fratings%2Fmethodology&index=2&md5=56a07584f81be8221979377f25178c0a">www.ambest.com/ratings/methodology</a>. </p><p><b>In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: </b><a href="http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww3.ambest.com%2Femea%2Fambersdisclosure.pdf&esheet=6859778&lan=en-US&anchor=A.M.+Best+Europe+-+Rating+Services+Limited+Supplementary+Disclosure&index=3&md5=4b8625ab82f9e5e718f9dfc08d9d7fdb"><b>A.M. Best <location value="LR/eur" idsrc="xmltag.org">Europe</location> - Rating Services Limited Supplementary Disclosure</b></a><b>.</b></p><p><b>A.M. Best <location value="LR/eur" idsrc="xmltag.org">Europe</location> – <org>Rating Services Limited</org> is a subsidiary of A.M. Best Company.</b><b>Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit </b><a href="http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.ambest.com%2F&esheet=6859778&lan=en-US&anchor=www.ambest.com&index=4&md5=633993b50a991dbbf0a9d0a97d8d5444">www.ambest.com</a>. </p><p class="bwalignc"><b>Copyright © 2011 by A.M. Best Company, Inc.</b><b>ALL RIGHTS RESERVED.</b></p><p class="bwalignc"></p><p><img alt="" src="http://cts.businesswire.com/ct/CT?id=bwnews&sty=20110913006716r1&sid=acqr4&distro=nx" /><span class="bwct31415" /></p><p><b><org>A.M. Best Co.</org><br /><person>Dean Portelli</person>, +(44) 20 7397 0267<br />Senior Financial Analyst</b><br /><a href="mailto:[email protected]">[email protected]</a><br />or<br /><b><person>Mahesh Mistry</person>, +(44) 20 7397 0325<br />Associate Director</b><br /><a href="mailto:[email protected]">[email protected]</a><br />or<br /><b><person>Carole Lovell</person>, +(1) 908 439 2200, ext. 5445<br />Public Relations Associate</b><br /><a href="mailto:[email protected]">[email protected]</a><br />or<br /><b><person>Jim Peavy</person>, +(1) 908 439 2200, ext. 5644<br />Assistant Vice President, Public Relations</b><br /><a href="mailto:[email protected]">[email protected]</a></p><p></p><p>Source: <org>A.M. Best Co.</org></p>